Treasuries Close Nearly Flat After Recovering From Initial Weakness

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After coming under pressure early in the session, treasuries climbed back near the unchanged line over the course of the trading day on Monday.

Bond prices bounced well off their initial lows before ending the day nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.892 percent after reaching a high of 0.936 percent.

The recovery by treasuries came as concerns about new lockdown measures inspired traders to seek to the relative safety of bonds.

New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio have both warned that the city could be headed for another “full shutdown” unless the second wave of coronavirus infections is contained.

“What is increasingly clear is that all forms of restrictions have to be on the table at this point,” de Blasio told reporters. “At the current rate we’re going, you have to be ready now for a full shutdown – a pause like we had back at the end of the spring.”

The warnings about a new round of shutdowns come despite the approval of the coronavirus vaccine developed by Pfizer (PFE) and BioNTech (BNTX).

The CDC signed off on the vaccine following the Emergency Use Authorization issued by the FDA. Pfizer has commenced the first shipments of the vaccine to distribution centers across the country.

The vaccine news contributed to the initial weakness among treasuries along with continued optimism about a new fiscal stimulus bill, with a report from Reuters detailing efforts to pass a previously unveiled $908 billion bipartisan relief plan.

A person briefed on the matter told Reuters the package will be split into two proposals that could be voted on separately in order to win approval.

Reuters said one bill would be a $748 billion measure including money for small businesses, the jobless and COVID-19 vaccine distribution, while the other would include more controversial measures such as liability protections for business and aid for state and local governments.

Trading on Tuesday may be impacted by reaction to a report on industrial production, although news on the coronavirus and stimulus fronts is likely to remain in the spotlight.

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