U.S. Treasury yields moved higher on Tuesday as new economic data strengthened expectations that the economy remains resilient, while uncertainty surrounding the midterm election results kept bond investors cautious. The benchmark 10-year Treasury yield rose 6 basis points to 4.954%, bringing it close to the 5% level that has drawn renewed attention in financial markets.
The increase extended across the Treasury curve. The 30-year yield advanced 5.5 basis points to 5.324%, while the two-year yield climbed 4.6 basis points to 4.629%. The two-year maturity is particularly sensitive to expectations for Federal Reserve interest-rate policy. The spread between the two-year and 10-year yields stood at a positive 32.3 basis points, according to Reuters data.
Economic data reinforces growth expectations
September job openings in the United States increased sharply, while layoffs declined. The figures suggested that labor demand remained relatively firm even as employment gains during the month were subdued. The latest information added to other signs of underlying economic strength, including data on factory orders and durable goods.
Those indicators helped reverse an earlier move in which yields briefly gave back some of their gains. Oil prices fell after President Donald Trump said he would cut funding for Israel after the end of the year, temporarily easing pressure on the bond market. The decline in yields was short-lived, however, as the economic figures renewed confidence in the pace of U.S. growth.
“Treasury yields are repricing higher following an unambiguously strong set of economic data. JOLTS, factory orders, and durable goods are all pointing to resilient growth despite the weakness in AI and tech,” — Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas
Election uncertainty limits positioning
Investors were also preparing for the results of the U.S. midterm elections, which will determine control of Congress for the remaining two years of President Donald Trump’s presidency. The outcome is being watched in bond markets because congressional control could affect the prospects for fiscal policy and the administration’s broader policy agenda.
Market participants have been reluctant to take large positions before the results become clearer. A divided Congress is widely viewed on Wall Street as the base-case outcome, according to the Reuters report, which could constrain either party’s ability to advance its policy priorities. That political uncertainty has added another factor to a bond market already responding to changing expectations about economic growth and interest rates.
- 10-year Treasury yield: 4.954%, up 6 basis points
- 30-year Treasury yield: 5.324%, up 5.5 basis points
- Two-year Treasury yield: 4.629%, up 4.6 basis points
- Two-year/10-year spread: positive 32.3 basis points
The combination of stronger job-opening data, fewer layoffs and firm factory and durable-goods readings has shifted attention toward the economy’s ability to sustain growth. For the Treasury market, that has contributed to higher yields even as investors await a clearer signal from the election results about the country’s fiscal direction.
