U.S. Treasury yields fell sharply on early Wednesday’s trade, following volatile overnight trading as investors poured into haven assets in face of a drawn-out American election outcome.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.792% fell 8.8 basis points to 0.793%, while the 2-year note rate TMUBMUSD02Y, 0.160% edged 0.8 basis point lower to 0.160%. The 30-year bond yield TMUBMUSD30Y, 1.544% tumbled 10 basis points to 1.556%.
What’s driving Treasurys?
Uncertainty around the U.S. presidential election has spurred inflows into bonds amid worries that Wall Street will now face days, if not weeks of uncertainty about the eventual victor as results from battleground states trickle in.
See: Biden leads Trump as control of presidency and U.S. Senate are still in doubt
Hopes of a “blue sweep” that would see Democrats take control over the White House and Congress took a deep blow based on current voting, deflating the bond-market short positions which were positioned to capitalize on an increase in economic growth and inflation expectations likely to follow from Biden’s fiscal agenda.
See: Stock-market hope for a ‘blue wave’ Election Day outcome washes out
In U.S. economic data, Automatic Data Processing Inc. said private-sector jobs increased by 365,000 in October, down from 749,000 in September. Meanwhile, the U.S. trade deficit fell 4.7% to $63.9 billion in September
The Institute for Supply Management’s gauge of services sector activity for October is due at 10 a.m. ET.
What did market participants say?
“The Treasury market brought in a significant bull flattening bid from the overnight session linked to the absence of a blue sweep,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, referring to when longer-term yields fell faster than their shorter-term peers.
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