U.S. Treasuries prices erased much of the day's losses Monday, driven by rumors of a bomb threat at a building in Washington DC, market sources said.

The benchmark 10-year Treasury note was down 5/32 in price, yielding 2.99 percent. It briefly turned positive in price during the market turnaround.

Bond prices had slid as a lack of agreement in Washington to reach a deal to lift the national debt limit led to fears of a rating downgrade and default.

``Rumored bomb threat; Washington DC building evacuated,'' said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.