US Treasury yields fall 7-8 basis points on Democratic sweep, Commonwealth Bank says
TLT•US Treasury yields fell about 7 to 8 basis points across the yield curve. Commonwealth Bank of Australia expects Democratic control of Congress to constrain major spending changes while increasing policy uncertainty.
1. Yields fall
US Treasury yields fell about 7 to 8 basis points across the yield curve, reflecting expectations of tighter fiscal constraints. Commonwealth Bank of Australia cautioned against overinterpreting the initial rally, citing substantial US deficits and borrowing requirements.
2. Australian bonds rally
Australian government bonds also rallied, though domestic factors influenced trading. The bank said US Treasury yields can affect Australian borrowing costs and that presidential authority over tariffs, sanctions and export controls could become more important, exposing Australia through global trade links.
