Treasuries Move Sharply Lower On Upbeat Coronavirus Vaccine News

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Treasuries moved sharply lower during trading on Monday following upbeat news regarding a potential coronavirus vaccine.

Bond prices showed a steep drop early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged up by 13.8 basis points to 0.958 percent.

With the spike on the day, the ten-year yield ended the session at its highest closing level since mid-March, when coronavirus-induced lockdowns began to take effect.

The sharp decline by treasuries came following upbeat results from a phase 3 study of the coronavirus vaccine being developed by Pfizer (PFE) and BioNTech (BNTX).

Pfizer and BioNTech said an interim analysis of the results found the vaccine candidate to be more than 90 percent effective in preventing COVID-19 in participants without evidence of prior infection.

“Today is a great day for science and humanity,” said Pfizer Chairman and CEO Dr. Albert Bourla. “The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19.”

The companies said they plan to submit the vaccine for regulatory approval in the U.S. and Europe soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November.

The vaccine news led to a further reduction in the safe haven appeal of bonds that was triggered in part by the weekend’s news that Democratic candidate Joe Biden’s is projected to win the presidential election.

Several major news organizations called the race for Biden on Saturday after projecting the former Vice President will win Pennsylvania and its 20 electoral votes.

The apparent victory for Biden potentially sets up a divided government, with control of the Senate likely to be decided by two run-off elections in Georgia.

However, President Donald Trump has refused to concede the race, alleging widespread voter fraud and launching legal challenges in several key states.

Traders largely shrugged off the results of the Treasury Department’s auction of $54 billion worth of three-year notes, which attracted average demand.

The three-year note auction drew a high yield of 0.250 percent and a bid-to-cover ratio of 2.40, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.42.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Looking ahead, the Treasury is due to announce the results of its auction of $41 billion worth of ten-year notes on Tuesday.

The material has been provided by InstaForex Company – www.instaforex.com

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