Treasurys rose early Monday, pushing short-term yields down by the most in almost two months, as investors sought the safety of U.S. government debt.
The jittery mood for investors centered on news of another day of Israeli air strikes in the Gaza Strip, which heightened tensions in the Middle East and helped push up energy futures.
Two-year note yielded 0.72%, down fell 16 basis points, or 0.10%, the biggest decline since Nov. 3.
Five-year note yields ) fell 12 basis points to 1.38%.
Yields on 10-year notes declined 7 basis points to 2.06%.
"The takeaway is refocusing on the unrest in the Middle East -- which is supportive for energy prices and flight-to-quality assets -- such as Treasurys," wrote strategists at RBS Greenwich Capital, one of the 17 primary U.S. security dealers.
No economic reports of note are on the calendar for Monday.
Volume is expected to remain low in another holiday-shortened week.
The Securities Industry and Financial Markets Association recommended that bond trading end at 2 p.m. Eastern time on Wednesday and remain shuttered on Thursday for New Year's Day.
A deteriorating economic outlook and a spreading contagion in financial markets that triggered a massive flight to safety among investors have led Treasurys of all maturities to return more than 14% this year, according to an index compiled by Merrill Lynch.
