NEW YORK: US Treasury yields fell to their lowest in a week on Wednesday as uncertainty ahead of next week's US Presidential election enhanced the appeal of safe-haven bonds.
Polls showing Republican Donald Trump closing the gap with Democrat Hillary Clinton have increased investor anxiety, given uncertainty over Trump's stance on key issues including foreign policy, trade relations and immigrants.
"The focus is almost exclusively on political risk and risk paring in general," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "If you were very long risk you are probably taking some of that off and positioning to a more defensive footing."
Benchmark 10-year notes were last up 4/32 in price to yield 1.81 percent, down from 1.82 percent late Tuesday. The yields fell to 1.79 percent in overnight trading, the lowest since Oct. 26.
The rally came as investors waited on a statement from the Federal Reserve's two-day meeting due later Wednesday. It will be evaluated for any new indications of whether the US central bank is likely to raise rates at its December session.
Already high expectations of a December rate hike may give the US central bank room to not explicitly signal a rate hike is coming as it waits on more data before the December meeting, including two more monthly employment reports.
"There is no need for the Fed to rock the boat here," said Goldberg.
Traders are pricing in a 74 percent likelihood that the Fed will raise rates in December, and only a 7 percent chance that the central bank will raise rates this week, according to the CME Group's FedWatch Tool.
Friday's payrolls report for October is expected to show that employers added 175,000 jobs, according to the median estimate of 106 economists polled by Reuters.
A report from payrolls processor ADP on Wednesday showed US private employers added 147,000 jobs in October, below economists' expectations.
The US Treasury also said on Wednesday it will hold steady the size of coupon auctions in the upcoming quarter and plans to conduct a small-value test buyback operation.
The department plans to offer $62 billion in Treasury securities next week, raising approximately $3.5 billion in new cash. It has conducted tests of its buyback capability since 2014 and said details of the upcoming operation would be released at a later date.
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