(Bloomberg) — Treasuries surged as a Democratic sweep in the US midterms led to a selloff in shares of large US technology companies, stoking demand for havens.
The rally in the US government bond market on Thursday sent yields down across maturities by as much as 12 basis points to the lowest levels since early September. The yield retreat began after the US stock market opened, with the Nasdaq 100 index falling 6.09% and the Philadelphia Semiconductor Index down 11.11%.
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The move reversed about half of its 12-basis-point drop on Nov. 5, when the Nasdaq 100 index suffered its biggest slide since March 2020.
The U.S. midterm elections sparked declines for shares of large U.S. technology companies and oil prices that fueled gains for U.S. government bonds, sending yields to the lowest levels since early September.
The Federal Open Market Committee's voting history heading into previous elections might shed light on how it approaches this week's decision.
A split Congress has often been a bullish recipe for Treasuries. Benchmark 10-year yields have been lower on average one and 12 months after midterms that produced such a result.
It's the same task the Fed chairman fumbled in July, when investors took a rate hold in stride but balked at Warsh's unwillingness to signal borrowing costs might need to move higher.
