By Mark DeCambre, MarketWatch

U.S. Treasury rates steadied on Monday after last week's rally in government bonds saw yields post their largest weekly slides of 2019. However, yields for government paper remained at or near multimonth lows as Asian markets booked steep losses and U.S. stocks looked set to slump.

Last week, buying in long-dated government bonds helped to create a phenomenon in fixed-income markets referred to as a yield-curve inversion (http://www.marketwatch.com/story/10-year-german-bond-yield-flirts-with-zero-after-lackluster-eurozone-pmis-2019-03-22) -- seen as a reliable warning of a potential recession within a year or two.

Read:The yield curve inverted -- here are 5 things investors need to know (http://www.marketwatch.com/story/the-yield-curve-inverted-here-are-5-things-investors-need-to-know-2019-03-22)

Market participants have focused on the inversion which occurred as the 10-year Treasury note yield last Friday fell as low as 2.42%, below the three-month T-bill yield at 2.455%. The yield curve is a line plotting out yields across maturities; and typically, it slopes upward, with investors demanding more compensation to hold a note or bond for a longer period given the risk of inflation and other uncertainties.

An inversion of the curve is generally viewed as a sign that investors are worried about long-term economic growth.

See: S&P 500 could fall 40% as yield curve inverts, says analyst (http://www.marketwatch.com/story/sp-500-could-fall-40-as-yield-curve-inverts-says-analyst-of-one-of-2018s-best-hedge-fund-returns-2019-03-22)

Currently, the 3-month T-bill stands at 2.455%, according to Tullet Prebon data.

On Monday, the yield on the 10-year Treasury note added 0.2 basis point to 2.461%, after the benchmark posted a fresh 15-month low on Friday.

The 2-year note yield edged up 0.3 basis point lower to 2.329%, following its finish on Friday at around a 10-month low, while The 30-year bond yield picked up 1.4 basis points to 2.907%.

Bond prices rise as yields climb.

All three maturities logged their largest weekly yield decline since at least Dec. 7, with the two-year note posting its sharpest weekly slide since Nov. 16, according to Dow Jones Market Data.

The yield curve has been flattening for some time, and the rate decline in recent trade deepened after weak eurozone economic data pulled down yields on Friday. The 3-month/10-year version is the most reliable signal of future recession, according to researchers at the San Francisco Fed.

Concerns about growth helped to further drive demand for longer-dated bonds, as stocks suffered one of their worst declines of 2019.

On Monday, Asian stock benchmarks tracked Friday's Wall Street losses. The Nikkei-225 index gave up 3%, while Europe stocks also fell in early trading and U.S. stock-index futures fell.

"A decent size selloff in Asian equities as they traded off 2-3%. As result Treasury prices firmed in a 'risk-off' mode with heavy volumes of 3-4 times normal," wrote Tom di Galoma, managing director at Seaport Global Holdings, in a Monday research note.

Still, Chicago Federal Reserve President Charles Evans, speaking in Hong Kong on Monday, sounded relatively sanguine about U.S. growth prospects (http://www.marketwatch.com/story/feds-evans-downplays-recession-risks-for-the-us-economy-2019-03-25).

"Whenever the yield curve gets flat, we see growth decelerating and, like I say, I'm looking for almost 2% growth this year. That sounds kind of low but it's actually relative to trend of one-and-three-quarters. It's a good growth rate," he said. Evans is a voting member of the rate-setting Federal Open Market Committee this year.

However, former Fed Chairwoman Janet Yellen (http://www.marketwatch.com/story/yield-curve-may-be-indicating-increased-chance-for-rate-cut-but-not-a-recession-says-former-fed-chair-yellen-2019-03-25), speaking at the same event hosted by Credit Suisse, said the inversion may indicate the need to cut interest rates at some point, though she also believed that it didn't assure a recession would occur.

Meanwhile, investors were watching developments in the U.K., as lawmakers enter another week of negotiations over Britain's planned exit from the European Union and as Prime Minister Theresa May faces fresh questions about her ability to remain in office.

Investors also have bought sovereign debt outside of the U.S., pushing the yield on 10-year Japanese government bonds to negative 0.089%, around the lowest since August 2016. The German 10-year bund yield , viewed as a proxy of investors view on the health of Europe's economy, has also slipped into negative territory at negative 0.009%.

(END) Dow Jones Newswires

March 25, 2019 08:29 ET (12:29 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.