Europe's debt problem may be spreading, and the resulting search for safety sent Treasury prices higher on Monday.
Stocks plunged in Italy and Spain as investors feared those countries may become the next to be sucked into Europe's debt crisis. The continent's problems so far have focused on smaller economies such as Greece. "Europe faces an ever-accelerating threat where the fires spread to each new nation with increased voracity and with less and less pause between events," Royal Bank of Scotland analysts wrote in a report.
Italy is the euro zone's third-largest economy, and its FTSE MIB stock index fell 4 percent. That prompted investors to shift money into lower-risk assets like U.S. government bonds.
The price of the benchmark 10-year Treasury note rose 91 cents per $100 invested. The yield fell to 2.93 percent from 3.02 percent late Friday. It was the first time it has been below 3 percent in July. Bond yields fall when their prices rise.
The 30-year bond rose $1.31 for each $100 invested. Its yield fell to 4.21 percent from 4.29 percent.
It was the second straight day of gains for Treasury prices. On Friday, the weakest hiring in nine months renewed worries about the U.S. economic recovery and sent investors toward Treasurys. The unemployment rate rose to 9.2 percent, its highest level since December.
The three-month Treasury bill paid a yield of 0.02 percent, the same as Friday. Its discount was 0.03 percent.