U.S. Treasury yields jumped on Monday following news that a coronavirus vaccine developed by Pfizer and BioNTech is proven to be more than 90% effective in a study.
The yield on the 10-year Treasury note jumped 13 basis points to 0.95%. The benchmark rate touched a high of 0.975%, its highest level since March 20. The yield on the 30-year Treasury bond climbed 15 basis points to 1.742%. Yields move inversely to prices.
The jump in yields came after U.S. pharmaceutical giant Pfizer and German biotech firm BioNTech announced Monday their coronavirus vaccine was more than 90% effective in preventing Covid-19 among those without evidence of prior infection.
The result was much better than the market was hoping for. White House coronavirus advisor Dr. Anthony Fauci has previously said one that is 50% or 60% effective would be acceptable.
The news came as cases of the coronavirus continue to surge in the U.S., with daily infections reaching a record of 128,412 on Saturday, according to data compiled by Johns Hopkins University.
"As stock markets rally around the world on the news, bond markets will sell off, driving yields higher and that will cause a repricing across all asset classes," Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in a note.
Clarity on the political front also helped boost risk sentiment. Democrat Joe Biden defeated incumbent Republican President Donald Trump in the U.S. presidential election race, according to NBC News projections. The call came four days after Election Day and amid close counts in several battleground states.
However, Senate control is uncertain as both of Georgia's Senate races are likely going to runoffs slated for early January.
Last week, bond yields slipped from their multi-month highs as the expectations of a "blue wave" scenario dwindled. Investors had hoped a unified government would approve big stimulus spending, which could result in more government debt and inflation.
Loretta J.Mester, president of the Federal Reserve bank of Cleveland, is due to make a speech at 15:30 p.m. ET and Philadephia Fed President Patrick Harker is set to speak at 16:20 p.m. ET.
Auctions will be held on Monday for $54 billion worth of 13-week bills, $51 billion of 26-week bills and $54 billion of three-year notes.
— CNBC's Vicky McKeever and Kevin Breuninger contributed to this story.