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Treasuries Show Notable Move To The Upside

After ending last Friday's trading nearly unchanged, treasuries showed a notable move to the upside during trading 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 4.8 basis points to 1.684 percent.

Treasuries benefited from their appeal as a safe haven amid turmoil in the Turkish lira and concerns over rising Covid-19 cases in Europe.

The Turkish lira slumped toward a record low versus the U.S. dollar after President Recep Tayyip Erdogan ousted central bank chief Naci Agbal for hiking interest rates to contain double-digit inflation.

The move came two days after the Central Bank of the Republic of Turkey hiked its benchmark policy rate by 200 basis points to 19 percent to tame its high inflation rate.

In a statement on Sunday, the central bank said it "will continue to use the monetary policy tools effectively in line with its main objective of achieving a permanent fall in inflation."

On the Covid-19 front, markets are bracing for another wave of coronavirus infections and new restrictions in Europe ahead of the Easter holiday.

Treasuries saw continued strength following the release of a report from the National Association of Realtors showing existing home sales in the U.S. tumbled by much more than expected in the month of February.

NAR said existing home sales plunged by 6.6 percent to an annual rate of 6.22 million in February after inching up by 0.2 percent to a downwardly revised rate of 6.66 million in January.

Economists had expected existing home sales to slump by 3.0 percent to a rate of 6.49 million from the 6.69 million originally reported for the previous month.

A separate report on new home sales may attract attention on Tuesday along with Federal Reserve Chair Jerome Powell's testimony before the House Financial Services Committee.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $60 billion worth of two-year notes.

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