Why are 10-year Treasury note, yield on 30-year bond down ahead of November 3 Election Day after hitting highest levels in October? Details here

US bond yield on the benchmark US 10-year Treasury note was last down 3.3 basis points at 4.896 per cent. The yield on the 30-year bond fell 3.8 basis points to 5.271 per cent. The 30-year yield hit its lowest level since September 9 while the 10-year yield dropped to its lowest level since September 10 during the session. The 2-year US Treasury yield, which typically moves in step with interest rate expectations for the Fed, was unchanged at 4.581 per cent.

A closely watched part of the US Treasury yield curve measuring the gap between yields on 2- and 10-year Treasury notes, seen as an indicator of economic expectations, flattened to a positive 31.3 basis points after steepening in the last three sessions, as per Reuters report.

Why were US Bond Yields Down?


Yields on benchmark 10-year notes and 30-year bonds were eyeing their third decline in a row as investors also awaited the November 3 US midterm elections, which will decide whether US President Donald Trump’s Republican Party will keep control of Congress for his final two years in office or relinquish its majority to the Democratic Party.

Crude oil futures registered their biggest daily declines in months after Iran's President Masoud Pezeshkian said the country's Supreme Leader has granted "certain authorities" to the government with regard to peace talks, according to state media.

"Oil is sliding down today so you could see yields come down in reaction to that. Higher oil prices lead to higher inflation levels. Lower oil prices would mean less pricing pressure," said JoAnne Bianco, senior investment strategist at BondBloxx Investment Management in Chicago.

While citing oil prices as the primary driver for bond buying on Monday, Tom di Galoma, managing director at Mischler Financial, said some investors were also favoring fixed-income bets due to estimates that the Democrats could take control of the House of Representatives and possibly the Senate.

With yields having hit their highest levels in decades in early October, Bianco at BondBloxx said some investors were still seeing an opportunity.


US Treasury Borrowings

The US Treasury said on Monday it expects to borrow $618 billion in the fourth quarter, $10 billion less than it projected in August, due to a higher-than-assumed starting cash balance that is partially offset by lower projected net cash flows.

Earlier, economic data showed that US manufacturing activity picked up in October amid solid domestic demand, keeping inflation at the factory gate elevated. The Institute for Supply Management said its manufacturing PMI increased to 55.5 last month from 54.5 in September compared with economist estimates that the PMI would stay at 54.5.