US midterm election results cheer US bond yields, 10-year treasury note, yield on 30-year bond, two-year treasury yield jump on Tuesday

US yield on the benchmark 10-year Treasury note rose 5.4 basis points to 4.948 per cent. The yield on the 30-year bond rose 5.2 basis points to 5.321 per cent. The two-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, rose 3.1 basis points to 4.614 per cent. Yields on longer-dated US Treasuries were higher on Tuesday as investors waited for US midterm election results while monitoring economic data and watching for progress in Middle East diplomacy.

The 10-year TIPS breakeven rate was last at 2.305 per cent, indicating the market sees inflation averaging about 2.3 per cent a year for the next decade. A closely watched part of the US Treasury yield curve measuring the gap between yields on two-and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 33.2 basis points.

Also, government bonds were facing some competition from the corporate bond market as Meta Platforms filed for a five-part senior notes offering. While the tech heavyweight did not disclose its offer size, Bloomberg News reported that investors placed as much as $58 billion of orders on the offering.


Treasury yields are repricing higher following an unambiguously strong set of economic data. JOLTS, factory orders, and durable goods are all pointing to resilient growth despite the weakness in AI and tech, said Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas.

"We'll get a sense of how this election has played out by tomorrow. There's no need to stick our necks out and put a lot of money on the line in markets today so the liquidity is a little bit lower," said Al-Hussainy.

"What that means in practice is anytime there is news ... (it) triggers an outsized reaction in terms of the movement in yields because there are just fewer buyers and sellers coming together to set the price."

While Wall Street's base case expectation is that the election will result in a divided Congress, which would limit either party's power to pursue its agenda, Sage's Urano said that investors were waiting to assess what the election might mean for the bond market.

"Once this is over and it's settled, we'll have a better direction on what the state of fiscal policy in the US looks like, debt limits, Treasury supply, and those are the factors that would affect the bond market," Urano said.