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Treasuries Come Under Pressure Amid Rebound On Wall Street

After showing a lack of direction early in the session, treasuries came under pressure over the course of the trading day on Monday.

Bond prices pulled back firmly into negative territory in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 0.726 percent.

Treasuries moved to the downside as stocks on Wall Street turned higher over the course of the session after seeing initial weakness.

The rebound by stocks came as traders shrugged off concerns about a second wave of coronavirus infections, continuing to express optimism about a quick economic recovery.

Some states around the U.S. have already begun to reopen, and New York Governor Andrew Cuomo revealed today that certain low-risk businesses and recreational activities can reopen statewide beginning May 15.

Cuomo also said some upstate regions are ready to move into phase one of the state's reopening plan, which will allow them to resume manufacturing, construction and agricultural operations as well curbside pickup at retail stores.

News that countries like Italy and the U.K. are planning to ease lockdown restrictions also overshadowed reports of new clusters of coronavirus cases in South Korea and China, which initially raised worries about the potential threats of reopening the economy too quickly.

Data from Germany's public health agency also indicated coronavirus cases in the country are once again on the rise following recent steps to ease lockdown measures.

Bond traders also shrugged off the results of the Treasury Department's auction of $42 billion worth three-year notes, which attracted above average demand.

The three-year note auction drew a high yield of 0.230 percent and a bid-to-cover ratio of 2.54, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.43.

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 $32 billion worth of ten-year notes on Tuesday.

A report on consumer price inflation in April is also scheduled to be released on Tuesday but is likely to be overshadowed by the latest news on the coronavirus front.

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