After ending last Friday’s trading nearly unchanged, treasuries showed a substantial move to the upside during trading on Monday.
Bond prices spiked early in the session and remained sharply higher throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 11.9 basis points to 1.181 percent.
With the steep drop on the day, the ten-year yield ended the session at its lowest closing level in over five months.
The rally by treasuries came amid concerns about a resurgence of the coronavirus, as the delta variant contributes to a spike in infections in the U.S.
According to data from the CDC, the 7-day average of Covid-19 cases in the U.S. has jumped to nearly 30,000 after falling as low as 11,455 a month ago.
The renewed Covid concerns also contributed to a sell-off on Wall Street, which inspired traders to look to the relative safety of bonds.
Treasuries saw further upside following the release of a report from the National Association of Home Builders showing an unexpected dip in U.S. homebuilder confidence in the month of July.
The report showed the NAHB/Wells Fargo Housing Market Index edged down to 80 in July from 81 in June. The modest decrease surprised economists, who had expected the index to inch up to 82.
With the unexpected drop, the housing market index slipped to its lowest level since hitting 78 in August of 2020.
On Tuesday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of June.
Housing starts are expected to jump by 1.6 percent to an annual rate of 1.597 million, while building permits are expected to climb by 1 percent to an annual rate of 1.700 million.