Bonds rise after bank shutdowns
Further concern about the U.S. banking system, stemming from FDIC closure of two regional banks Friday, sends Treasurys up Monday.
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NEW YORK (CNNMoney.com) -- Treasury prices rose Monday after the government shutdown of two local banks on Friday sparked further worries about the strength of the U.S. financial sector.
The benchmark 10-year note rose 21/32 to 98 27/32, and its yield fell to 4.03% from 4.09% late Friday. Bond prices and yields move in opposite directions.
The 30-year long bond rose 1 9/32 to 96 9/32, with the yield falling to 4.63% from 4.68% late Friday.
The newly auctioned 2-year note rose 6/32 to 100 8/32, driving its yield to 2.59% from 2.71%.
The FDIC stepped in on Friday to shutter the First National Bank of Nevada and First Heritage Bank N.A. on Friday, just two weeks after federal regulators shut down IndyMac bank.
The shutdowns of these 2 regional banks sparked further concerns about trouble in the credit market and overshadowed the Senate's approval of a bill to prop up struggling mortgage finance companies Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
"This raises some questions to bond investors that maybe despite the [housing] bill that the economy and the banking system is not on firm footing yet," said Michael Cheah, bond mutual fund manager at AIG SunAmerica.
Seven banks have failed this year as credit and housing market problems continue to plague the financial industry and weigh on the broader economy.
Stocks, led by declines in the financial sector, turned lower Monday. Fixed-income instruments such as U.S. Treasury bonds are viewed by many as a safe investment during times of economic stress. 
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