10-year Treasury yield falls below 5%

NEW YORK (CNNMoney.com) -- Treasury bond prices rose Monday, sending the yield on the 10-year note below 5 percent for the first time since early June, as bond market rate fears cooled.

The 10-year Treasury note climbed 7/32, or $2.18 for every $1,000 invested, to yield 4.99 percent, down from 5.02 Friday. Bond prices and yields move in opposite directions.

The last time the 10-year yield traded below the key psychological barrier of 5 percent was on June 7.

"Our sense is the Treasury market was oversold over the last month and the move down is just a correction back towards more reasonable fundamental values," said Scott Anderson, a senior economist with Wells Fargo & Co.

Treasury yields soared last month, with the benchmark yield hitting 5.30 percent, a 5-year high, as investors grew jittery that faster economic growth and a pickup in inflation would push up interest rates worldwide.

Car bombings late last week and over the weekend in London and Glasgow and an explosion in Yemen also provided support to Treasury prices Monday.

But bond traders appeared unfazed by the Institute of Supply Management's monthly reading on manufacturing growth, with a key production component rising to highest rate in nearly 3 years.

The 30-year bond rose 13/32, or $4.06 on a $1,000 note, to yield 5.09 percent, down from 5.12.

The five-year note rose 4/32 to yield 4.89 percent, while the two-year note edged up one tick to yield 4.85 percent.

In currency trading, the dollar fell sharply against the euro and yen.

The euro bought $1.3623 up from $1.3535 Friday, while the dollar bought ¥122.42 down from ¥123.12 in the previous session.

-- from staff and wire reports