Treasuries Move Sharply Higher Amid Worries About Greece

(RTTNews) - Following the sharp pullback seen last week, treasuries showed a substantial move back to the upside during trading on Monday.

Bond prices moved steadily higher throughout much of the session before closing sharply higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 14.5 basis points to 2.331 percent.

The rally by treasuries came as traders looked to the relatively safe haven of bonds as the latest round of talks between Greece and its creditors broke down over the weekend.

Greek Prime Minister Alexis Tsipras subsequently called for a referendum on the bailout proposals by creditors on July 5th.

The country is required to make a 1.6 billion euro payment to the IMF on June 30th, and the Greek Prime Minister is seeking to get an extension until the referendum.

With the European Central Bank opting to freeze the emergency liquidity assistance for Greek banks in the wake of the referendum call, Greece decided to close its banks and imposed capital controls.

Long lines were seen at ATMs across Greece, as customers have been limited to withdrawals of 60 euros per day.

"The Greek Government's decision to call a referendum has elevated the crisis to a higher level," said Jonathan Loynes, Chief European Economist at Capital Economics. "While a deal may yet come together, a near-term Grexit now seems more likely than not."

Amid the focus on Greece, traders largely shrugged off a report from the National Association of Realtors showing U.S. pending home sales climbed to a nine-year high in May.

NAR said its pending home sales index climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April. Economists had expected the index to rise by 0.6 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

With the bigger than expected increase, the pending home sales index reached its highest level since hitting 113.7 in April of 2006.

Any further developments regarding Greece are likely to attract attention on Tuesday along with U.S. reports on home prices, consumer confidence and Chicago-area business activity.