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Long-term Treasury prices climbed on Monday as conflict in Iraq intensified, with investors continuing to demand the safety of U.S. government debt. With a radical Sunni group firmly in control of some of the western territories of Iraq, the United States was preparing to coordinate with Iran, both of whom committed to supporting Iraq’s Shiite prime minister. Photos posted on Twitter showed what Sunni militants claimed to be a mass execution of Shiite soldiers. Those developments helped give a boost to the safety of U.S. Treasurys.

The benchmark 10-year note (10_YEAR) yield, which falls as prices rise, was down slightly on the day at 2.602%, according to Tradeweb. The 30-year bond (30_YEAR) yield dropped half a basis point to 3.408%.

Treasurys cut some gains after a report showed industrial production rose 0.6% in May, bouncing back from a 0.3% drop in April. Economists had expected a 0.5% gain.

Bond investors will be looking ahead to a policy statement and news conference by the Federal Reserve on Wednesday. Market participants are looking for clues about when and how the central bank may raise its key interest rate, which has been held near zero for the past five years.

Traders who bet on the future path of the fed funds rate currently project a first rate hike occurring in June of next year, according to CME FedWatch. The Treasury yields most sensitive to shifts in Fed monetary policy rose on Monday, with the 3-year note (3_YEAR) yield up 1.5 basis points at 0.949%, and the 5-year note (5_YEAR) yield up a basis point at 1.705%.

Deutsche Bank research strategists led by Francis Yared wrote late Friday: “The market is more dovish than even a conservative interpretation of the March FOMC projections. Given the improvement in the unemployment rate and core inflation since March, the June FOMC projections are unlikely to be lowered to meet current market pricing.

Treasurys held their price action after New York regional manufacturing data showed activity held steady in June. The index edged up to 19.3 in June from 19.0 in May, beating expectations of a 16.7 reading.

By Ben Eisen