U.S. bonds rally as Democrat sweep seen stalling spending
TLT•Treasuries rallied as projections that Democrats would take control of Congress led investors to expect gridlock and slower government spending. The 10-year yield fell about 5 basis points to 4.90%, while the 2-year yield dropped to a nearly two-month low of 4.5458%.
1. Treasury yields fall
Benchmark 10-year Treasury yields fell about 5 basis points in Tokyo trade to 4.90%, and 2-year yields dropped to a nearly two-month low of 4.5458%. Bond prices rose as yields fell, while futures slightly reduced expectations for Federal Reserve rate rises next year.
2. Spending and AI outlook
Analysts said expectations of congressional gridlock, the fading prospect of a proposed $5,000 payment to U.S. adults, and a flight to the safety of bonds as stock markets slid helped Treasuries rally. Andrew Lilley said a Republican president facing Democratic control of both congressional chambers would frustrate spending plans and probably modestly reduce overall spending; he also said an expected brake on AI development could slow growth.
