Treasury prices held near a three-week high on Monday as investors awaited the first wave of employment data that could influence the Federal Reserve's next policy move. The 10-year yield dropped to 4.43%, down two basis points, while the market prices in roughly a 60% chance of a rate increase following last week's signals.

The yield slide reflects a cumulative 25 basis point decline over two weeks, driven by easing inflation expectations. Progress in Iran-US negotiations has lifted hopes for lower oil prices, reducing concerns about energy-driven cost pressures that have anchored Fed policy debates.

New Fed Chair Kevin Warsh faces his first major policy decision as markets scrutinize labor market trends. Recent economic indicators suggest resilience, but the jobs numbers will provide clarity on whether wage growth remains elevated enough to justify tighter monetary policy.

Bond traders are positioning for volatility around the employment report, with the yield curve flattening slightly. The market reaction underscores how geopolitical de-escalation and domestic labor data continue to drive Treasury strategy in an uncertain policy environment.