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(Bloomberg) — Treasuries surged along with government bonds in Australia and Japan, as Greece leader Alexis Tsipras’s decision to call a referendum on aid conditions scotched speculation the Mediterranean nation would reach a deal with creditors.

Yields on benchmark 10-year U.S. notes headed for the biggest decline since 2011 as the impasse in Europe stunned markets that had become increasingly focused on both a resolution to Greece’s debt crisis and improving U.S. economic data. Stronger readings have boosted the case for the Federal Reserve to raise interest rates as early as September as investors look ahead to June employment data due July 2.

“When you don’t know a lot of what could happen, the standard and rational response is to reduce your positions, reduce your risky bets and park your money somewhere safer,” said Sam Tuck, a senior currency strategist at ANZ Bank New Zealand Ltd. “The only thing we really do know is we don’t know a lot of what could potentially happen.”

The benchmark Treasury 10-year yield dropped 17 basis points, or 0.17 percentage point, to 2.30 percent as of 9:15 a.m. in Tokyo, Bloomberg Bond Trader data show. The 2.125 percent note due in May 2025 climbed 1 13/32 to 98 12/32.

Yields on similar-maturity Australian notes dropped 14 basis points to 2.92 percent and those on Japanese securities of the same tenor declined three basis points to 0.44 percent.
Greek Prime Minister Tsipras rejected the latest aid proposals by creditors on Friday, announcing a referendum on them for July 5 and saying he would advocate a “no” vote. With cash flooding out of banks at a record pace and the bailout expiring Tuesday, Greece will shut lenders Monday.
The 10-year U.S. yield had touched 2.49 percent on Friday, the highest on an intraday basis since June 11, and increased 21 basis points last week.

–With assistance from Susanne Walker Barton in New York.

To contact the reporters on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net; Kevin Buckland in Tokyo at kbuckland1@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Benjamin Purvis