(Bloomberg) -- Treasuries rose after robust demand for an auction of two-year notes showed that expectations for Federal Reserve interest-rate cuts later this year remain a powerful inducement for buyers of US government debt.

The advance pushed yields lower across tenors, with rates on long-dated bonds closing at their lowest level in more than a week.

The move — which began early in the session as France led a rally for most global bonds — was aided by the strong auction result. The $69 billion sale of two-year notes was awarded at 3.580%, more than a basis point below its yield at the bidding deadline.

The sale was "absorbed very well," said Jonathan Cohn, head of US rates desk strategy at Nomura Securities. Considerations included yields near the high end of their range since late September and the fewer than eight basis points of Fed rate cuts priced in for the next three policy meetings, as well as "dollar weakness potentially encouraging some foreign official buying," he said.

Before the auction, short-maturity Treasuries — more closely tied to the interest rate set by the Fed — were also restrained by the Commerce Department's preliminary durable goods orders data for November that were stronger than economists estimated. The data supported expectations that policymakers will pause cutting rates this week.

The early price action drove longer-dated yields closer to shorter-dated ones, the opposite of what many investors have been anticipating.

"Economic data still suggests a decent growth picture, putting flattening pressure on the curve, which is likely causing some unwind of the popular steepener," said Dan Carter, a senior portfolio manager at Fort Washington Investment Advisors. It's aided, he said, by global bond markets shaking off last week's selloff in Japanese government bonds and aggressive US rhetoric seeking control of Greenland.

Interest-rate strategists at Citigroup Inc. and Natixis SA expect those forces to return and are recommending investors prepare for a selloff in longer-term US Treasuries.

Related story: Citi, Natixis Warn Investors of Long-End Treasury Risk: Roundup

Fed policymakers are expected to leave rates unchanged on Wednesday after cuts at each of their past three meetings in response to signs of job-market weakening.

Traders still see the central bank as likely to deliver two more this year, however the market-implied level for where the rate will come to rest at about 3.25% is "at the top end of what we consider a fair value range," which helped the auction, said Blake Gwinn, head of US rates strategy at RBC Capital Markets.

The auction drew strong demand despite taking place a day earlier than normal. Treasury's note and bond sales normally take place no earlier in the week than Tuesday, with Monday used when necessary to avoid coinciding with Fed decision days. This week's sales also include a $70 billion five-year Tuesday and a $44 billion seven-year Thursday.

The auction yield was the highest for a two-year note since August. The two-year yield has climbed this month in response to signs of improvement in the job market including a drop in the unemployment rate.

The activity in Treasuries conformed to a weeks-long low-volatility trend, even as the dollar and precious metals markets saw dramatic shifts. The dollar extended a three-day slide, reaching the lowest level since September, amid signs the US and Japan were preparing to act to halt a slide in the yen. Gold surged as much as 2.6% to a record high on haven demand that's bypassing bonds and currencies as sovereign debt loads grow.

Related story: Yen Extends Gain as PM Warning Points to Intervention Risk

Expectations about Fed policy also have been shifting in response to changes in the consensus view on whom US President Donald Trump will nominate to succeed Fed Chair Jerome Powell, whose term expires in May.

Trump has been saying since June that his decision on a successor to Powell was down to four or fewer candidates and would be announced soon. During that time, prediction markets have favored several in turn as the likely nominee, with BlackRock executive Rick Rieder currently leading.

(Updates prices and yields.)

More stories like this are available on bloomberg.com