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 two-year yields, which are most sensitive to interest rate changes, were up 3.5 basis points, the largest daily rise since early October. A Clinton victory would remove the last remaining obstacle to the Federal Reserve raising interest rates next month, analysts said.
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.
The selloff in Treasuries was accompanied by gains in US stocks, a rally in the Mexican peso and a flight out of the safe-haven yen, suggesting increased risk appetite.
Jim Vogel, interest rates strategist at FTN Financial in Memphis, said US Treasuries sold off on reports that Clinton did well in early voting before Election Day.
"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.
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.
On Wednesday, the US Treasury will sell $23 billion in 10-year notes and another $15 billion in 30-year bonds on Thursday.
In late trading, benchmark 10-year note yields were down 8/32 in price to yield 1.858 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 10/32, yielding 2.618 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 were at 0.857 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 3/32 in price to yield 1.021 percent, up from Monday's 0.981 percent.
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