U.S. bond yields fall as oil tumbles and investors assess Democratic election victory
TLT•The 10-year Treasury yield fell 5.2 basis points to 4.898% as oil prices dropped more than 9% and investors assessed Democrats’ victory in both chambers of Congress. The 2-year yield fell 3.5 basis points to 4.579%.
1. Yields reverse lower
Treasuries gained during a choppy session as oil prices tumbled and Democrats won control of the Senate and House. The 10-year yield fell 5.2 basis points to 4.898%, after earlier reaching 4.9642%; the 30-year yield fell 3.4 basis points to 5.29%, and the 2-year yield fell 3.5 basis points to 4.579%.
2. Investors weigh election effects
Some investors bet that gridlock between Congress and the White House could limit government spending. Investors also considered whether weaker oil prices and measures restricting data center construction could ease inflation and moderate growth. Oil fell more than 9% after President Donald Trump said the United States had no immediate plans to strike Iran.
3. Treasury issuance outlook
The Treasury Department changed its language on future auction sizes, a shift analysts expect may lead to larger sales of short- and intermediate-dated debt and possible cuts to longer-dated auctions. The 10-year inflation breakeven rate was 2.252%, indicating the market saw inflation averaging about 2.3% annually over the next decade.
