Treasury Yield Edges Higher Ahead of Midterm Election Results

The US 10-year Treasury yield rose slightly to 4.92% on Tuesday as investors positioned for potential short-term volatility surrounding the US midterm elections.

Initial results are expected once polling stations close, with attention focused on whether Democrats can gain control of both chambers of Congress.

While a Democratic sweep remains a possibility, the outcome is far from certain.

A divided government could reassure bond investors by limiting further fiscal expansion, although it would do little to address the underlying budget deficit.

On the fiscal front, the US Treasury lowered its Q4 borrowing estimate by $10 billion to $618 billion, reflecting a higher-than-expected opening cash balance.

However, excluding this additional cash cushion, borrowing needs are actually $24 billion higher than previously projected.

Elsewhere, oil prices extended Monday’s sharp decline after President Donald Trump said Washington would end its $4 billion aid programme to Israel by year-end.