BOND REPORT: Treasurys Edge Up As Stocks Flounder

By Deborah Levine

Treasury prices posted slight gains Monday, erasing earlier losses, as stocks compounded their losses while investors fretted about how the government will support financial institutions.

Ten-year note yields (UST10Y) slid 1 basis point to 2.78%, after earlier reaching 2.88% earlier. A basis point is 0.01%.

Yields on 2-year notes (UST2YR), which move inversely to prices, inched down 1 basis point to 0.94%, after having briefly risen above the 1% mark for the first time since Feb. 10.

Bonds retraced losses as U.S equities surrendered early gains, indicating continued concerns about the banking sector after the government detailed plans to begin "stress tests" of financial institutions.

"There are a lot more questions than answers right now," said Mario De Rose, a fixed-income strategist at Edward Jones & Co.

Safe havens such as U.S. government debt typically draw money from investors are shying away from riskier assets, like equities.

"The market is probably going to stay in a relatively narrow range until we get more answers about the banks," De Rose said.

LATIN AMERICAN MARKETS: Cemex, U.S. Bank System Worries Pull Mexico To Four-month Low

By Carla Mozee

Mexican equities were knocked back to four-month lows Monday, with losses suffered by cement maker Cemex SAB after a ratings downgrade and pressure from Wall Street, where stocks crumbled to 12-year lows.

Mexico's IPC fell 2% to 17,956.40. It was the lowest close for the benchmark since Oct. 23, and its fifth decline in a row.

On Wall Street, investors remained on edge as the U.S. government prepared to release details this week about stress tests it plans to administer to financial institutions. The S&P 500 Index (SPX) dropped 3.5% to 743.33, and the Dow Jones Industrial Average (DJI) fell 3.4% to 7,114.78.

Among the measures, bank regulators will consider how much capital a bank has left if it were to register its losses immediately. Companies that fail tests could be forced to accept investment from or be nationalized by the government.

In Mexico City, shares of Cemex (CX) stumbled 4.9% after Fitch Ratings cut the company's credit ratings, saying the company is facing a heavy debt load while three of its key markets -- the U.S., Spain and the U.K. -- are in " unprecedented downturns." Cemex is the largest provider of ready-mix concrete and cement to the U.S.