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US Treasurys jump on Greece fears

Ayhan Mehmet | Anadolu Agency | Getty Images. U.S. Treasury prices bounced on Monday, as investors piled into safe-haven assets as the Greek crisis entered a new chapter following the instigation of capital controls.

U.S. Treasury prices bounced on Monday, as investors piled into safe-haven assets as the Greek crisis entered a new chapter following the instigation of capital controls.

That pushed yields lower across the curve, with the benchmark 10-year Treasury note (U.S.: US10Y) down 11 basis points at 2.362 percent. The yield on the 30-year bond (U.S.: US30Y) fell to 3.129 percent-down from a nine-month high hit on Friday at 3.25 percent.

U.S. stock indexes declined sharply, following European and Asian bourses lower, with the Dow, Nasdaq and S&P each dropping more than 1 percent.

Greece's main stock exchange was closed on Monday and banks across the country were shut to prevent a run on financial institutions. The central bank has also recommended a 60 euro ($66) limit on withdrawals from cash machines.

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Read MoreCapital controls: CNBC Explains

This came after reforms-for-financial aid talks between Greece and its creditors broke down and the European Central Bank capped emergency funding to Greek banks on Sunday.

Greek Prime Minister Alexis Tsipras has also called a referendum on July 5, in which Greeks will vote on whether to accept the rescue package previous offered by Athens' international bailout supervisors, which is contingent on austerity measures.

"In the absence of a sudden dramatic turn of events towards reconciliation between the Greek government and its creditors, it is difficult to see how it will be able to repay the European Central Bank on July 20, whatever the outcome of the coming weekend's referendum," said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, in a research note on Monday.

Other so-called safe-haven assets also gained, including German Bunds (Germany: DE10Y-DE), 5-year Bobls (Germany: DE5Y-DE) and 2-year Schatzs (Germany: DE2Y-DE).

Greek bond prices declined dramatically (Exchange: GR10Y-GR) to yield 14.5 percent, a peak last seen in December 2012.

The bond prices of nearby euro zone countries viewed at risk of contagion also declined, with yields higher on Italian (Italy: IT10Y-IT), Spanish and Portuguese government debt.

In the U.S., pending home sales data for May are released later on Monday, but eyes will be fixed on the upcoming nonfarm payrolls employment report which will be release a day early because of Friday's Independence Day holiday.

"Away from Greece, Thursday's U.S. nonfarm Payrolls data is the only data release of note which may influence market sentiment," said Jassie Singh, credit strategist at Lloyds Bank, in a research note on Monday.

-By CNBC's Katy Barnato , follow her on Twitter @KatyBarnato.



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