Treasuries surged, with benchmark 10-year yields falling the most since March 2009, as a decline in retail sales prompted traders to reduce wagers the Federal Reserve will raise interest rates in 2015.

U.S. debt pared gains as stocks trimmed losses after Bloomberg News reported Fed Chair Janet Yellen voiced confidence in the durability of the U.S. economic expansion during a closed-door meeting last weekend. Futures show traders betting that the Fed will raise interest rates in December 2015, with chances of an increase in September fading to 35 percent. The benchmark 10-year yield traded below 2 percent for the first time since June 2013, even as the Fed is forecast to end its quantitative easing (QE) this month.

"Everybody is finding something to worry about," said Robert Tipp, chief investment strategist in Newark, New Jersey for Prudential Financial Inc.'s fixed-income division, which oversees $533 billion in bonds. "People who were concerned an end of QE would lead to a correction of the risk markets are getting their validation."