U.S. Treasury yields edge lower as markets turn focus to election

“Timing on results could be delayed. Regardless of who wins the election, the market is certainly anticipating more fiscal aid. And that aid may not arrive until 2021,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

U.S. Treasury yields fell slightly Monday as investors prepared for a busy week likely to be dominated by Tuesday’s presidential election.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.879% was down a basis point to 0.848%, after marking its largest monthly gain in over two years last Friday, while the 2-year note rate TMUBMUSD02Y, 0.164% edged 0.2 basis point up to 0.158%. The 30-year bond yield TMUBMUSD30Y, 1.657% fell 1.5 basis points to 1.623%.

What’s driving Treasurys?

The presidential election likely will overshadow economic data and central bank meetings this week, with analysts unsure whether a winner will be known on the night of the election.

Investors fear a drawn-out election outcome, with many market players preferring to find out the winner, soon after election night.

The Federal Reserve will conclude a two-day policy meeting on Wednesday, amid growing pressure on the central bank to deploy further policy support in face of a rapidly accelerating coronavirus pandemic.

In economic data, the Institute for Supply Management said its index of manufacturing activity rose to a two-year high of 59.3 last month from 55.4 in September. Any number above 50 represents an increase in activity. The most important data highlight is the official employment report for October on Friday.

The Treasury Department said Monday it expects to borrow $617 billion in the fourth quarter, which is $599 billion lower than previously estimated.

What did market participants say?

“Nobody’s interested in the jobs report or the Fed meeting. It’s really all about tomorrow,” said Greg Staples, head of fixed income at DWS Group, in an interview.

“Timing on results could be delayed. Regardless of who wins the election, the market is certainly anticipating more fiscal aid. And that aid may not arrive until 2021,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities