Treasurys sank Monday after a new round of corporate deals bolstered confidence in the economy and weakened demand for safe investments like government debt.
Falling prices pushed yields sharply higher, with yields on both the 10-year note and 30-year bond hitting their highest levels since August.
The 10-year note, often used as a benchmark for consumer loans, fell 1 4/32 to 97 15/32, sending its yield up to 3.68 percent from 3.54 percent late Friday.
French drug maker Sanofi-Aventis SA agreed to buy health care products company Chattem Inc. for $1.9 billion, and mining equipment maker Bucyrus International Inc. said it will purchase Terex Corp.'s mining equipment division for $1.3 billion.
A pickup in mergers and acquisitions often comes early in economic recoveries as companies that had been holding onto cash during a downturn look for new investments. Stocks rallied on the announcements. Major indexes all rose about 1 percent.
The yield on the 30-year bond jumped to 4.56 percent from 4.46 percent. Its price dropped 1 22/32 to 96 30/32.
The two-year note fell 4/32 to 99 25/32, while its yield rose to 0.87 percent from 0.80 percent.
The yield on the three-month T-bill rose to 0.05 percent from 0.03 percent. Its discount rate was 0.06 percent.
The cost of borrowing between banks fell slightly. The British Bankers' Association said the rate on three-month loans in dollars _ the London Interbank Offered Rate, or Libor _ slipped to 0.2488 percent from 0.2513 percent.