2020.10.2619:30:00UTC+00Treasuries Move Higher Amid Spike In Coronavirus Cases

After ending the previous session nearly unchanged, treasuries moved to the upside during the trading day on Monday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 0.801 percent.

Treasuries benefited from concerns about a resurgence in coronavirus cases, with new infections reaching a new record high last Friday.

Data from John Hopkins University showed that new coronavirus cases reached a new high of 83,757 last Friday and topped 83,000 again on Saturday.

In an interview with CNN on Sunday, White House chief of staff Mark Meadows argued that the pandemic could not be controlled and suggested the administration would focus on vaccines and therapeutics.

The spike in new coronavirus cases comes as lawmakers in Washington appear to remain at an impasse over a new stimulus bill.

Negotiations continue, but traders appear pessimistic that an agreement on a new relief package will be reached before next week's elections.

Adding to the appeal of safe havens such as bonds, the Commerce Department released a report showing an unexpected slump in new home sales in the month of September.

The report said new home sales tumbled by 3.5 percent to an annual rate of 959,000 in September after jumping by 3 percent to a revised rate of 994,000 in August. The pullback surprised economists, who had expected new home sales to surge up by 2.8 percent.

"We expect the pace of sales to moderate further in the fourth quarter," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "While strong demand and low mortgage rates are supportive of home sales, the resurgence in Covid-19 cases, a recovery that may be shifting into reverse and a weak labor market pose downside risks."

Trading on Tuesday may be impacted by reaction to reports on durable goods orders, home prices and consumer confidence.

The Treasury Department is also scheduled to announce the results of its auction of $54 billion worth of two-year notes.