A professional trader works on the trading floor of the New York Stock Exchange on October 23, 2024.
Brendan McDermid | Reuters
U.S. Treasury yields rose in early trading Tuesday evening as investors awaited the outcome of the tight presidential race between Vice President Kamala Harris and former President Donald Trump.
this 10-Year Treasury Bond The yield rose 15 basis points to 4.44%, the highest since July 2. 2-Year Treasury Bond It rose 10 basis points to 4.30%, the highest level since July 31. There is a reciprocal relationship between output and price.
Although NBC News has not yet surveyed any major swing states, traders speculated that early returns would be good for the former president.
Bond yields could rise sharply If Trump wins, the Republican Party could achieve a landslide victory, taking control of Congress and the White House. That’s because Republicans are likely to roll out tax cuts and high tariffs, measures that could widen the fiscal deficit and reignite inflation.
“If Republicans sweep the House, the Senate and the presidency, I expect there will be turmoil in the bond market,” Jeremy Siegel, a finance professor at the Wharton School of the University of Pennsylvania, told CNBC.scream box“Tuesday. “I expect they will be concerned that Trump is going to enact all these tax cuts, and I think bond yields are going to go up.
Neither Trump nor Harris made a real commitment to fiscal discipline on the campaign trail, raising concerns that investors will demand more as the government is forced to issue more and more debt to fund its ballooning spending. Higher yields in exchange for holding U.S. Treasuries.
“Bonds are seeing a massive sell-off across the yield curve as the Trump trade is enacted again,” Byron Anderson, head of fixed income at Laffer Tengler Investments, wrote. “We see markets expecting a Trump win, And there’s a real possibility of a Republican sweep.”
Stephanie Roth, chief economist at Wolfe Research, said yields are expected to be closer to 4.5% if Trump wins and fall to 4% if Harris wins.
A Harris administration with a divided Congress could push bond yields back down.
“I think with a divided Congress, whoever wins the presidency is probably the market favorite, so neither candidate is able to advance their full agenda,” Siegel said.
benchmark 10-Year Treasury Bond Yield It surged 50 basis points in October, the largest monthly gain since September 2022.
On Thursday, the Federal Reserve will make its next interest rate decision, and is widely expected to cut interest rates by 25 basis points.
