Treasurys have seen a massive reversal following the news that Donald Trump has been elected President of the United States.
Aggressive buying pushed yields down as much as 17 basis points in the belly of the curve after Trump won the key battleground state of Florida, North Carolina, and Ohio.
However, once it was clear that Trump was indeed victorious, vicious selling took hold across the complex and has continued throughout the entire US session.
Here’s a look at the scoreboard as of 1:36 p.m. ET:
- 2-year +3.6 bps at 89.0 bps 3-year +8.7 bps at 1.112% 5-year +13.6 bps at 1.462% 7-year +17.0 bps at 1.809% 10-year +19.5 bps at 2.050% 30-year +23.4 bps at 2.850%
Wednesday’s selling has yields at the front of the curve at their highest levels since June while the long end of the curve has run up to levels last seen in January 2015. A steeper yield curve has taken hold with the 2-year/10-year spread wider by 16 bps at 116 bps and at its steepest level since February.
As for how a Trump presidency impacts Treasurys over the longer-term, that's still up in the air. In a note to clients sent out on Tuesday, Barclays' Interest Rate Research team of Rajiv Setia, Anshul Pradhan, and Amrut Nashikkar wrote, "If his agenda entails major fiscal stimulus, accompanied by a softer stance on anti-trade policies, we would expect a large bear-steepening sell-off; 10y yields could rise to 2-2.25%." They continued, "Alternatively, if his agenda centers on trade wars with no mention of tax reform, fiscal stimulus, and other market-friendly policies, risk-off may become acute and recession probabilities could rise. 10y yields could rally to 1.4% or lower."
