Treasury notes fell on Monday after a report of lower U.S. home sales and a rise in stocks.

The commerce department reported today that sales of new homes in the U.S. fell 4.7 percent in December to an annual rate of 604,000, the lowest since 1995.

Meanwhile, after an initial dip, U.S. stocks were up moderately in early afternoon trading as chances for an aggressive Federal Reserve rate cut this week increase following the poor housing data.

Last week, the Fed cut rates by a steep 0.75 points to 3.5 percent in an effort to avert an economic recession.

Two-year notes were yielding 2.209, down 2/32 in price. 10 year notes dropped 8/32 in price to yield 3.588 percent.