By Sam Goldfarb

U.S. government-bond prices extended recent gains Monday after a gauge of U.S. home-builder confidence fell below expectations.

The yield on the benchmark 10-year U.S. Treasury note settled at 3.059%, its lowest close since Oct. 2, compared with 3.074% Friday.

Yields, which fall when bond prices rise, initially climbed overnight. But they slipped as U.S. stocks opened lower and dropped further after the National Association of Home Builders said its housing-market index dropped by eight points to a reading of 60 in November, underscoring builders' rising concerns over climbing interest rates and home prices.

Economists surveyed by The Wall Street Journal had expected an index reading of 67 this month. Soft economic data generally help bolster U.S. Treasurys by increasing demand for safer assets and lowering expectations for future interest-rate increases by the Federal Reserve.

The drop in yields Monday followed substantial declines last week, when a series of comments from Fed officials caused investors to lower their forecasts for interest-rate increases.

In an interview on CNBC Friday, Federal Reserve Vice Chairman Richard Clarida said the central bank should take a "data-dependent" approach to raising rates. He also cited slowing global economic growth as a factor in his outlook and said interest rates were getting closer to a so-called neutral level, where they neither spur economic growth nor slow it down.

Mr. Clarida's comments came a day after Federal Reserve Bank of Atlanta President Raphael Bostic said the Fed should take a "tentative approach" to raising rates. Fed Chairman Jerome Powell also said last week that the central bank was monitoring a modest deceleration of global growth and volatility in the financial markets, though he didn't say that either development was enough right now to change the Fed's current policy of gradually tightening monetary policy.

Some analysts expect Treasury yields to rebound before long. Investors have "had a serial problem of underestimating the Fed in the last two years and I think they're at the risk of doing it again," said Thomas Simons, senior vice president and money-market economist in the Fixed Income Group at Jefferies LLC.

Mr. Simons added that "this week is probably going to be one where the market is more reactive than proactive" given a relative lack of economic data and expected commentary from Fed officials.

The bond market will be closed Thursday for Thanksgiving and will close early on Friday.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

November 19, 2018 16:33 ET (21:33 GMT)

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