As another round of Eurozone contagion scared investors away from the equities market, U.S. Treasuries, along with related exchange traded funds, attracted heavy safe-haven interest, with benchmark yields hitting record lows.

The iShares Barclays 7-10 Year Treasury Fund (NYSEArca: IEF) was up 0.2% and the iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) was 0.5% higher at last check Monday.

The yield on the benchmark 10-year U.S. Treasury note dropped to an all-time low of 1.40% during early trading on concerns that the Eurozone debt crisis was worsening, according to Bloomberg. [Spain’s Financial Distress Drags on Stock ETFs]

“Nothing is really fixed in Europe,” John Manley, chief equity strategist for Wells Fargo Advantage Funds, said in the article. “The Spanish situation is chronic. And it’s not just Spain. This isn’t over.”

Additionally, Greece’s failed attempts to meet bailout targets has stoked risk fears.

“It’s the European story,” David Ader, head of U.S. government-bond strategy at CRT in Stamford, said in another Bloomberg report. “Greece presumably is going to have to exit the euro. With the troika meeting tomorrow, there’s a real sense they will come away with nothing. And that’s being reflected in the downward pressure in yields and in the euro.”

As the Eurozone debt crisis deepens, the euro currency hit its lowest level in two years. The euro was trading at $1.21 at last check, down 1.2% Monday.

The CurrencyShares Euro Trust (NYSEArca: FXE) was down 0.3% while the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) was 0.2% higher.

The U.S. dollar acts as a safe-haven currency since global investors would convert to dollar and purchase U.S. Treasuries in uncertain market conditions.

iShares Barclays 7-10 Year Treasury Fund

Read the disclaimer; Tom Lydon is a board member of Guggenheim Investments.

For more information on U.S. debt, visit our Treasury Bonds category.

Max Chen contributed to this article.

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