U.S. bonds rally as Democratic sweep seen stalling spending
TLT•Treasuries rallied after Democrats won control of both chambers of Congress, with 10-year yields down 2.1 basis points to 4.9291% and two-year yields down almost 1.2 basis points to 4.6017%. Investors weighed the possibility of slower government spending and growth.
1. Yields fall
Benchmark 10-year Treasury yields fell 2.1 basis points to 4.9291%, while two-year yields declined almost 1.2 basis points to 4.6017%. Yields had earlier dropped more sharply to an almost two-month low before retracing some of the move as global equities turned positive.
2. Spending and growth
Analysts said Democratic control of Congress could frustrate President Donald Trump's spending plans and lead to a modest reduction in overall spending. They also said possible future regulation of AI could slow growth and reduce the need for Federal Reserve rate hikes. Money markets slightly reduced expectations for rate rises next year. Strategists warned that inflation risks persist, with potential renewed U.S. strikes on Iran posing risks to oil prices and inflation.
