Treasury yields edge up as Election Day meets JOLTS, refunding

 Treasuries edged lower as Americans went to the polls, with bond traders shrugging at the headline risk and saving their nerve for what comes next. 

The benchmark 10-year yield rose about 2 basis points to 4.93%, bouncing from its lowest since Sept. 10.

The 2-year yield, the tenor most tethered to the Fed, ticked up to 4.608%, close to its own lowest since that date. The 30-year yield was near 5.29%. Even after Tuesday’s uptick, the 10-year sits about 43 bps below the 5.3645% peak it touched on Oct. 7, the highest since 2002.

Prediction markets put Democrats near 90% to win the House and roughly 64% to take the Senate, so a blue House is the base case and the Senate is the genuine toss-up.

StoneX ranks a split Congress as the friendliest outcome for markets. The tail risk is a Republican sweep, which ING says could push the 10-year yield above 5.5%. Lombard Odier notes that yields have usually fallen in the months after a midterm, whoever wins.

Fiscal arithmetic is why bond desks care. The deficit hit about $2 trillion last year, roughly 6% of GDP, with debt near 100% of GDP.

Then comes the data. September JOLTS is due at 10 a.m. ET. August job openings slipped to 7.08 million, below forecasts and down from 7.33 million in July. ADP follows Wednesday, jobless claims and productivity on Thursday, and October payrolls on Friday.

The stakes are high because the Fed held at 3.75%-4.00% last week in a 10-2 vote, with two officials dissenting in favor of a hike, and Chair Kevin Warsh declined to offer forward guidance. Markets price about a 73% chance of a December hike, so any sign of labor-market softness could reopen the debate, while a hot print would cement it.

Treasury’s quarterly refunding statement lands Wednesday at 8:30 a.m. ET, and desks will parse it for any shift in auction-size guidance. On Monday, Treasury estimated fourth-quarter borrowing at $618 billion, $10 billion below its August projection, though that benefits from a larger opening cash balance. Excluding it, needs are $24 billion higher.

AI jitters

The bond market is also still digesting last week’s AI-fuelled wobble. Alphabet’s worst day in years, Amazon’s cash burn and Intel’s weak guidance sent money into Treasuries, and Apple’s warning that memory-chip costs will squeeze margins through the holiday quarter added to the mood.

The spread on U.S. high-yield bonds over Treasuries was 339 bps on Monday, after touching an 18-month high on Friday. Big Tech’s funding binge is spilling beyond dollars, with Alphabet launching another euro bond sale and Oracle planning to raise $20 billion through bonds and shares. Morgan Stanley estimated earlier this year that hyperscalers would sell about $400 billion of bonds in 2026.

Abroad, yields are also near recent lows. Germany’s 10-year Bund yield hovered near 3.3%, its lowest since August, while France’s 10-year yield held near 4.97% after Fitch moved its outlook to negative. U.K. gilts yielded about 5.23% before Thursday’s Bank of England decision, where a 25 bp hike is widely expected.

With the election outcome largely priced, the market’s real verdict may come Wednesday, when the Senate picture clears and the refunding statement lands.