NEW YORK: US Treasury yields rose across the board on Tuesday, recovering from early lows, as investors increasingly priced in an election victory for Democratic presidential candidate Hillary Clinton.
US 30-year bond yields, which move inversely to prices, climbed to two week-peaks, while those of benchmark 10-year notes advanced to one-week highs. US two-year and three-year note yields rose to their highest since late October.
"Markets strain for any advantage to be first, leading to a brisk US Treasury sell-off on early vote previews that suggest Clinton did well prior to today," said Jim Vogel, interest rate strategist at FTN Financial in Memphis.
"Markets also believe heavy turnout in selected states for Clinton will boost her party in hotly contested Senate races as well," he added.
Betting exchanges and online trading platforms on Tuesday said Clinton held a higher probability of winning than Republican Donald Trump. While Trump made modest gains in probability to win on some online platforms, many gave Clinton a better than 75 percent chance of victory. On Monday, Treasuries sold off in the wake of news on Sunday that Clinton would not be indicted with respect to her use of a private email server.
"Yesterday was a reflection of the increased odds of a Clinton presidency," said Bryce Doty, senior vice president and senior portfolio manager at Sit Fixed Income Advisors, in Minneapolis.
"The market likes knowing what the outcome is going to be, more importantly sometimes than the candidate."
A lackluster US three-year note auction also added to the market's bearish tone. The three-year note's high yield was 1.034 percent, compared with 1.035 percent at the bid deadline. Bids totaled just under $64.7 billion for a 2.69 bid-to-cover ratio, the lowest since July.
Indirect bidders, consisting of foreign central banks, took just 42.6 percent, below last month's 52.1 percent and the 51.1 percent average.
In early afternoon trading, benchmark 10-year note yields were down 11/32 in price to yield 1.869 percent, up from Monday's 1.828 percent. US 10-year yields earlier hit a one-week peak of 1.876 percent.
US 30-year bond prices fell 19/32, yielding 2.632 percent, up from 2.602 percent late on Monday. Earlier in the session, 30-year yields hit 2.64 percent, the highest since early June.
Two-year note yields, which are most sensitive to interest rate changes, were at 0.869 percent, up from Monday's 0.822 percent. Following the US three-year note auction, three-year notes touched two-week highs and were last down 4/32 in price to yield 1.029 percent, up from Monday's 0.981 percent.
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