Bond Report: 2-year Treasury yield pulls back from 15-year high as investors await U.S. midterm election results

by | Nov 8, 2022 | Stock Market

The 2-year Treasury yield on Tuesday edged down from its highest level in more than 15 years as investors awaited results of a U.S. midterm election that will determine control of Congress and could affect federal spending plans.What yields are doing
The yield on the 2-year Treasury note
TMUBMUSD02Y,
4.701%
fell to 4.718%, down from 4.726% at 3 p.m. Eastern, which was the highest since July 25, 2007.

The 10-year Treasury note
TMUBMUSD10Y,
4.189%
yielded 4.215%, ticking up from 4.212% Monday afternoon.

The 30-year Treasury bond yield
TMUBMUSD30Y,
4.294%
was 4.321%, up from 4.312% late Monday.

Market drivers Polls and betting markets indicate Republicans are likely to take control of the U.S. House and have a strong shot at flipping the Senate from the Democrats in the midterm elections. Republican control of one or both chambers would likely lead to gridlock on the legislative front, stymieing the potential for increased fiscal spending, analysts said.

Related: The stock market could pop higher after midterms: Morgan Stanley’s Mike Wilson Otherwise, investors have remained focused on monetary policy. Federal Reserve Chair Jerome Powell last week signaled that interest rates would need to move higher than officials had previously expected as the central bank struggles to rein in stubborn inflation. Fed officials have signaled it remains unclear just how high rates will ultimately rise. Meanwhile, the October reading of the consumer-price index is due on Thursday.What analysts say “Whether the elections result in a split Congress or one fully controlled by the Republicans, no major legislation is likely to pass in the next two years, especially on the fiscal front,” wrote economists at UniCredit Bank, in a Tuesday note.

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