Government bond prices edged higher Monday even after Standard & Poor's warned that it could downgrade U.S. debt in the next two years.
Treasury prices initially fell on the news but later recovered. The 10-year note is up 25 cents for every $100 invested in late trading Monday. The yield slipped to 3.38 percent from 3.41 percent late Friday.
S&P raised doubts over the ability of Congress and the Obama administration to reach an agreement to pare the country's rising debts. The agency said there was a 33 percent chance it could downgrade U.S. debt from its top AAA rating if no agreement is reached before 2013.
The price of the 30-year bond is up 37.5 cents. Its yield fell to 4.45 percent from 4.47 percent.
The yield on the two-year Treasury note fell to 0.66 percent from 0.70 percent.
The yield on the three-month T-bill edged down to 0.05 percent from 0.06 percent. Its discount was 0.06 percent.