US yields post sharp gains as Trump victory triggers caution about deficits
Longer-dated US bond yields surge
Trump win seen widening deficits
Tariff plans could also increase inflation
US yield curve hits steepest since late September
Focus shifts to Fed meeting
Adds new comment in paragraphs 7-8, results of US 30-year bond auction in paragraphs 11-12, updates prices
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 6 (Reuters) -U.S. Treasuries fell sharply on Wednesday, propelling yields to multi-month highs as Donald Trump's presidential election victory ignited bets on economic policy shifts that could boost deficits and inflation.
The Republican former President swept back to power early on Wednesday, beating Democratic candidate Vice President Kamala Harris and capping a political comeback four years after he left the White House.
The benchmark 10-year Treasury yield US10YT=RR rose to 4.479%, its highest since July, as polls also showed Republicans winning control of the Senate and a close race for the House of Representatives.
The 10-year yield, which moves inversely to the price, was last up 15.3 bps at 4.441%, on track for its biggest one-day rise since April.
U.S. yields, however, pared gains after a better-than-expected 30-year Treasury bond auction.
Trump campaigned on a platform of tax cuts, which economists say would juice the economy, widen budget deficits and increase government borrowing. He also touted tariffs, which analysts expect to stoke inflation and reduce the Federal Reserve's scope to cut interest rates.
"The risk in the market with Trump is an undisciplined fiscal situation. At some point in 2025, the deficit will grab the narrative of the market," said James Camp, managing director of fixed income and strategic income at Eagle Asset Management in St. Petersburg, Florida.
"If you believe that the gap between rhetoric and policy could be a mile-wide ... there is still an impulse from Trump on the spending side that would be bearish for bonds. The leaning in bonds is to be cautious given the results."
The yield on the 30-year Treasury note US30YT=RR last traded 16.5 bps higher at 4.612%, after earlier hitting 4.678%, the highest since late May. It is set for its biggest one-day rise since March 2020, underscoring concerns about future borrowing.
SOLID US 30-YEAR BOND AUCTION
Wednesday's sale of $25 billion worth of 30-year bonds lured buyers after being sharply sold off. The note was priced at 4.608%, lower than the rate forecast at the bid deadline, suggesting investors did not demand extra yield to take down the note.
There were $66 billion in bids for a 2.64 bid-to-cover ratio, up from 2.50 previously and the 2.31 from the August new issue.
Meanwhile, the MOVE index .MOVE, the benchmark gauge of rate volatility, hit a more than one-year high of 136.25 on Monday, suggesting Treasury yields across most maturities will move at least 8.5 basis points per day in either direction over the next month. It was last at 130.43.
Harley Bassman, creator of the MOVE index and managing partner at Simplify Asset Management, predicted that based on his calculations, option prices anticipate an outsized move of 18 basis points in Treasury yields a day or two after the election. That was roughly the size of the move so far on Wednesday.
Treasury yields surged once it became clear Trump had considerably improved on his 2020 election performance against President Joe Biden.
On the short end of the curve, the two-year yield US2YT=RR peaked at 4.312%, its highest since late July, and last traded roughly 7.5 bps higher at 4.278%. It was on pace for its biggest one-day gain in a month.
The U.S. yield curve steepened sharply on Wednesday, with the gap between two-year and 10-year yields hitting 19.5 US2US10=TWEB, the highest since late September. The curve was last at 16.10 bps, from 8.8 bps late Tuesday.
The curve has been on a steepening trend for the last few months, a scenario that occurs when the Fed is cutting interest rates.
The Fed, meanwhile, kicks off its two-day monetary policy meeting on Wednesday and is expected to deliver another 25-bps rate cut, though future decisions look less certain.
Traders have reacted to the election results by trimming bets on Fed cuts next year, with rates seen staying above 4% until May 2025. The market has priced in about 42 bps of cuts this year and another 62 bps of reductions in 2025. Next year's estimate came down from about 90 bps a few weeks ago, based on LSEG's calculations.
"I start to worry when yields cross the 4.50% mark," said Matt Orton, chief market strategist at Raymond James Investment Management.
"If we don't reverse that upward trend, I would be more reticent to add too much more risk until we hear from the Fed or get a little bit more guidance with respect to where terminal rates might lie."
U.S. yields hit multi-month highs on likely Trump win https://reut.rs/3AjB2ah
Reporting by Gertrude Chavez-Dreyfuss in New York; Additional reporting by Harry Robertson in London, Davide Barbuscia in New York, Rae Wee in Singapore, and Dhara Ranasinghe in London; Editing by Christopher Cushing, Shri Navaratnam, Christina Fincher, Barbara Lewis, Richard Chang and Rod Nickel
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دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
