US short- and medium-dated Treasury yields hit their lowest levels in at least 13 days on Monday on mounting European political uncertainty and a dearth of information on US President Donald Trump's promised pro-growth policies. With Trump's promises to cut corporate taxes and boost infrastructure spending yet to be fleshed out, analysts said the risk was increasing that the plans would fade further into the background.
A growing concern is that Trump's tax and spending plans have taken a back seat to other issues such as his temporary immigration ban, spurring demand for safe-haven Treasuries, analysts said.
Benchmark 10-year Treasury yields touched 2.406 percent, their lowest level since January 24. US two- and seven-year yields also fell to their lowest since that date to 1.153 percent and 2.180 percent. US three-year yields touched 1.405 percent, their lowest in nearly three weeks, and five-year yields touched their lowest in more than two weeks at 1.844 percent.
US 30-year Treasuries prices rose by more than a full point and their yields touched a session low of 3.045 percent, a level that was within recent ranges. "The longer Congress and the Trump administration dither on fiscal stimulus, the less likely in everyone's estimation that it will come to pass," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
Kohli said traders who may have bet against or "shorted" Treasuries on expectations that such stimulus would be a higher priority may be buying back or covering those positions, contributing to the rally in prices and drop in yields. A decline in German Bund yields on a cloudier political outlook in Europe helped stoke demand for US debt, said John Briggs, head of strategy for the Americas at NatWest Markets.
France's far-right party leader Marine Le Pen launched her bid for the presidency on Sunday with a vow to fight deregulated globalisation and to take France out of the euro, leading French 10-year government bond yields to hit their highest since September 2015 of 1.160 percent and 10-year Bund yields to hit a two-week low of 0.360 percent.
The US Treasury will sell $24 billion in three-year notes Tuesday, $23 billion in 10-year notes Wednesday, and $15 billion in 30-year bonds Thursday.