Investors pushed Treasury yields lower Monday after Federal Reserve Chairman Ben Bernanke renewed his pledge to keep interest rates low for the time being.
In late trading, the yield on the benchmark 10-year Treasury note fell to 3.34 percent from 3.43 percent late Friday as its price rose 22/32 to 100 9/32.
In comments at the Economic Club of New York, Bernanke said the Fed will monitor the falling dollar, but made clear that the central bank plans to keep interest rates at record-low levels to support the economy's recovery.
Short-term Treasury yields are closely linked with the government's benchmark interest rate. As a result, Bernanke's remarks encouraged investors to price in lower Treasury yields, said Michael Pond, interest rate strategist at Barclays Capital.
"Bernanke was clearly more dovish than the market was expecting," he said.
The gains in Treasurys came as stocks soared to new 13-month highs and gold climbed to a record high of $1,144 an ounce. Stocks, bonds and commodities have risen in tandem in recent months as cheap interest rates and a falling dollar encourage investors to buy a broad range of assets. Typically, Treasurys and stocks move inversely with one another. Treasurys tend to rise when investors are selling out of stocks and searching for a safer place to park their money.
Low interest rates are likely to put additional downward pressure on the dollar and could drive prices for stocks, bonds and commodities higher.
In other trading, the yield on the 30-year bond fell to 4.28 percent from 4.36 percent, while its price rose 1 12/32 to 101 21/32.
The yield on the two-year note fell to 0.78 percent from 0.81 percent.
The yield on the three-month T-bill was unchanged at 0.05 percent. Its discount rate stood at 0.06 percent.
The cost of borrowing between banks dipped. The British Bankers' Association said the rate on three-month loans in dollars _ the London Interbank Offered Rate, or Libor _ fell to 0.2713 percent from 0.2725 percent.