US Treasury prices ended mixed on Monday as upbeat auto sales, construction numbers and stock gains weighed on a market still smarting from robust manufacturing data that came out late last week.
"We had this plunge in prices on January 2 after the strong ISM manufacturing report so just the fact that we had some follow-through selling, rather than a correction, is significant," said Josh Stiles, senior bond strategist at IDEAglobal.
"The market is also unsettled by the dollar falling sharply and a likely strong payroll number on Friday."
Economists polled by Reuters estimated that US non-farm payrolls expanded by 130,000 jobs in December after growing by 57,000 in November.
Another worry for bonds was the latest slump in the dollar since there are signs the slide is scaring foreign investors away from US assets.
The dollar hit a record low versus the euro and reached a three-year weak point against the yen on Monday as the prospect of low US interest rates for some time to come encouraged investors to give the cold shoulder to the greenback.
Federal Reserve Board Governor Ben Bernanke said in a speech on Sunday that the Fed is right to hold interest rates at 45-year lows even though the US economy seems to have improved while keeping inflation low with productivity gains.
The Federal Reserve's Open Market Committee is scheduled to meet to discuss interest rates in late January, and markets are forecasting the key US rate to remain on hold at 1 percent.
The two-year note rose 1/32, its yield easing to 1.93 percent, versus 1.94 percent after an 11-basis-point climb on Friday. Five-year notes were flat, its yield at 3.35 percent, unchanged from Friday.
The 30-year bond shed 2/32, taking its yield to 5.18 percent from 5.17 percent.
The benchmark 10-year Treasury note lost 2/32 on top of a full point drop on Friday. Its yield held steady at 4.38 percent, having hit a month high of 4.41 percent earlier.
The prospect of more supply coming to market was another market concern, Stiles said.
The market faces fresh supply this week with Treasury set to auction $16 billion in five-year notes on Wednesday and $12 billion in 10-year inflation-protected paper the day after.