US Treasuries prices gained on Monday as investors fretted about Tuesday's US presidential election and as strikes and protests in Greece over yet more austerity measures clouded the outlook for further bailout funds for the debt-laden country.
Greeks took to the streets over the government's latest belt-tightening proposals two days ahead of a vote by lawmakers on the plan, which is needed to secure more aid and stave off bankruptcy.
Adding to investor nervousness, the neck-and-neck race between President Barack Obama and Republican challenger Mitt Romney has done little to clarify the path ahead for the world's biggest economy.
"A little bit of weakness in risk assets and position-squaring before the US elections and the prospect of the Greek vote on Wednesday lifted Treasuries," said Matt Duch, portfolio manager at Calvert Investments, which is based in Baltimore, Maryland and has over $12 billion in assets under management.
Benchmark US 10-year notes rose 10/32 in price, driving their yields to 1.684 percent from 1.72 percent late on Friday. Yields are in the middle of their recent trading range, but toward the lower end of their year-long range between 2.38 percent and a record low of 1.38 percent.
Some analysts say a win by Obama could favour US government debt, with US Federal Reserve Chairman Ben Bernanke perhaps staying on beyond the January 2014 expiration of his current appointment, while a Romney win would be a positive for stocks on business-friendly policies and tax cuts.
The Standard & Poor's 500 stock index has risen 50 percent since the beginning of Obama's first term in office and bonds have also rallied.
The looming fiscal cliff, with about $600 billion in government spending cuts and higher taxes set to kick in from January 1, is another critical factor.
Resolving that set of budget issues will be a top priority for whoever wins - but what a potential solution or compromise could look like remains murky.
If Obama wins, "we think the Treasury market is likely to rally as worries about a negative growth shock pick up," said Anshul Pradhan of Barclays. "On the other hand, Romney's election would likely reduce the chances of a fiscal accident."
Also on Monday, a potential fine on HSBC, Europe's biggest bank, boosted the safe-haven bid for US debt. HSBC said that a US fine for anti-money laundering rule breaches could cost it significantly more than $1.5 billion and is likely to lead to criminal charges.
The rise in US bond prices was in sync with a move up in safe-haven German Bunds to two-month highs.
Thirty-year Treasury bonds rose 22/32, their yields easing to 2.871 percent from 2.91 percent late on Friday. In the corporate market, AbbVie Inc has launched the biggest-ever dollar-denominated debt issue in the US high-grade market, raising $14.7 billion in a six-part deal that will price later on Mon day, IFR reported.