Government bond yields fell slightly in slow trading on Monday. Traders were focused on this week's auctions of two-year and five-year notes, which starts with today's $16 billion auction of the two-year.

An $11 billion auction of five-year notes will follow on Wednesday.

Matthew Alexy, senior market strategist with First Boston Corp., attributed Monday's rise in bond prices to investors covering short positions. "There is no real information driving any of this stuff he said.

The two-year note was yielding 4.18%, down from 4.19% on Friday. The five-year note yield was 5.23% late Monday, down from 5.24% on Friday, the 10-year note yield was 5.91%, down from 5.92%. The 30-year bond yield closed Monday at 6.68%, down from 6.69%.

T-Bills at 3.10%

The average discount rate for three-month Treasury bills at Monday's auction was 3.10%, and for six-month bills it was 3.24%. These were the highest rates since the June 7 auction.

Stocks rose strongly, with the Dow Jones industrial average gaining 21 points to close at a record 3,568.

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