NEW YORK (CNN/Money) - Treasurys posted modest gains Monday as investors looked to fixed-income securities as violence in Iraq intensified over the weekend.

At about 4:10 p.m. ET, the benchmark 10-year note gained 14/32 of a point to 96-15/32 to yield 4.44 percent, down from 4.45 percent late Friday, and the 30-year bond added 5/32 of a point to 102-1/32 to yield 5.22 percent, down from 5.24 late Friday.

The two-year note advanced 4/32 of a point to 98-20/32 to yield 2.23 percent and the five-year note rose 3/32 of a point to 98-1/32 to yield 3.56 percent. Bond prices and yields move in opposite directions.

Two U.S. soldiers were killed in a massive explosion Monday in Baghdad, and another coalition soldier was killed during fighting with insurgents in Fallujah, military officials said.

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Despite attracting investor interest given the continuing violence in Iraq, bonds have been pressured by a string of positive economic reports from the retail, purchasing and employment sectors.

On Monday, the Commerce Department said new home sales posted their biggest gains in nine months, jumping 8.9 percent in March to an annual rate of 1.23 million, up from a revised 1.13 million rate in February.

It was the highest sales rate since September, and the biggest monthly gain since last June, when mortgage interest rates fell to the lowest levels since the early 1960s.

Federal Reserve Chairman Alan Greenspan has taken note of the recent reports, saying last week that interest rates will have to rise at some point to keep inflation at bay during the rebound.

"I don't think bonds have much value," bond bear Steve Smith, executive vice president of Brandywine Asset Management, told Reuters. "The chances of zero to 1 percent inflation seem lower than 2 to 3 percent (inflation). I'm not sure the market is set for that."

Inflation is a negative for bond investors as it eats away at the principal of the investment as yields rise with inflation.

In the currency market, the dollar fell against the euro and the yen on reports of renewed violence.

The euro bought $1.1869, up from $1.1837 late Friday, and the dollar bought ¥108.69, down from ¥109.15 late Friday.