U.S. Treasury prices settled lower Monday after comments by Federal Reserve Chairman Ben Bernanke encouraged traders to buy up stocks, sending the market to its highest level in years.
Bernanke suggested that the economy might need more help from the Fed to significantly reduce the unemployment rate. He sounded a pessimistic tone about jobs, noting that employment and working hours are still far below their pre-2008 levels.
The comments suggested that the Fed will keep short-term interest rates near zero for the foreseeable future. Traders had speculated in recent weeks that the Fed would scrap its plan to keep rates low through 2014.
Optimism about possible Fed action set off a stock-buying spree. The Dow Jones industrial average rose 161 points, its third-biggest gain this year, to close at 13,241.
The price of the 10-year Treasury note fell 15.6 cents for every $100 invested, pushing its yield up to 2.26 percent from 2.23 percent late Friday. Bond yields and bond prices move in opposite directions.
The price of the 30-year Treasury bond fell 58.8 cents per $100 invested, pushing its yield up to 3.34 percent from 3.31 percent late Friday.
The yield on the two-year Treasury note fell to 0.35 percent from 0.36 percent.
The yield on the three-month Treasury bill rose to 0.08 percent from 0.07 percent late Friday.