US Treasury yields fell across most maturities on Thursday as investors assessed the outcome of the US midterm elections and awaited fresh employment data. The yield on the benchmark 10-year US Treasury note fell by around 3 basis points to 4.865% at 4:11 am ET on Thursday.
Treasury yields and bond prices move in opposite directions. A basis point is equal to 0.01 percentage point, or one-hundredth of 1%.
This means bond prices rise when yields fall and decline when yields increase, according to CNBC.
US midterm election results
The latest movement came as investors continued to assess the US midterm election results, in which Democrats won control of Congress. The Democratic victory, described as a ‘blue wave’, has raised questions about the direction of US government policies during the remaining years of President Donald Trump’s term. Investors are assessing how the Democrats’ control of Congress could affect Trump’s policy plans and the government’s decisions on major issues, including foreign policy. Treasury yields had already fallen sharply after the election results. Investors expect a lower possibility of further escalation in the Iran war following the midterm election results. These inflation concerns have also raised fears that central banks could take a more aggressive approach to interest rates to control rising prices. Such a move could put further pressure on government bonds.
The 10-year Treasury yield ended Wednesday’s trading session 6 basis points lower. Investors are now waiting for the latest US weekly jobless claims data, which is scheduled to be released at 8:30 am ET on Thursday. Because higher energy prices have been putting pressure on government bonds around the world this year, the fall in oil prices is also important for bond markets.
The report will provide fresh information about the number of people filing for unemployment benefits, according to CNBC. Oil prices also fell on Thursday for the fourth consecutive day.
