Thursday, November 15, 2018


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Treasury yields fell on Wednesday after the U.S. midterm elections resulted in the Democrats winning the House of Representatives and the Republicans retaining the Senate.

highest level since 2008. Bond yields move inversely to prices.

“We think a gridlock environment for an economy poised to decelerate makes it harder now for the full term structure to keep rising,” George Goncalves, head of fixed-income strategy at Nomura Securities International, said in an emailed statement.

“In the short run, this does not change the trajectory of the Fed, so curves should flatten,” Goncalves added. “In the more medium term, we still believe that 10-year rates can make another move above 3.25 percent, but our conviction is lower now.”

The Federal Reserve’s policymaking arm gathered on Wednesday for the first session of a two-day meeting. Concerns around the pace of interest rate hikes led to a roller-coaster ride for global markets last month. Markets have been pricing in a higher probability that the Fed raises rates again in December, with further tightening seen through 2019.

Fed officials, responsible for keeping unemployment low and inflation tame, have gradually increased interest rates under Chair Jerome Powell as they try to prevent the U.S. economy from overheating.

The Federal Open Market Committee will announce its latest adjustment to monetary policy on Thursday. Should the central bank choose to tweak its policy in November, it’s likely it will move to increase the rate paid by the Fed for excess reserves. No major adjustments are expected from the November meeting, however.

And the U.S. Treasury is set to auction $19 billion in 30-year Treasury bonds on Wednesday at 1 p.m. ET.

—CNBC’s Ryan Browne contributed reporting.

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