NEW YORK • Bond traders still clinging to their desks right into a volatile year end are driving Treasury yields to multi-month lows across the curve.

The 10-year yield dipped below 2.7 per cent on Monday, into territory last seen in the teeth of last February's volatility spike.

The benchmark rate has been on a sliding trend for most of the fourth quarter, spurred by an equity-market sell-off that, at one point, left the S&P 500 index almost 20 per cent below its record level.

A surprisingly weak Federal Reserve Bank of Dallas manufacturing survey and softer oil prices were among the few catalysts to be found on Monday, with trading closing early ahead of the New Year's Day holiday.

FTN Financial strategist Jim Vogel said these factors may have highlighted value in the longer end of the curve following an aggressive repricing in short-term rates since last month's Fed meeting.

"It took quite a long time for the rest of the Treasury curve to respond to that, so now there are parts of the real yield curve that are too steep," he said. However, he doesn't expect to see deeper lows in benchmark yields as activity picks up this month.

"In Formula One racing, if a driver's about to crash, he takes his hands off the wheel so his arms don't get broken - after the Fed, traders took their hands off the wheel," Mr Vogel said. "But in January, they're going to have to get serious about what's the plan in this new market."

BLOOMBERG