US Treasury futures declined to ten-month lows on Friday as bond investors worried that US President-elect Donald Trump would enact policies that increase inflation, which reduces the value of debt. Bond prices tumbled this week after Trump's surprise election on Tuesday with long-dated bonds, the most sensitive to inflation, performing the worst.
Investors expect Trump to adopt protectionist trade policies that may hurt the dollar and increase commodity prices and the cost of goods. Trump has also indicated he would spend more on developing US infrastructure, which could increase the US budget deficit and Treasury supply, while also promising tax cuts.
US 10-year Treasury futures fell as low as 127-5/32, the lowest since January 12, before retracing back to 127-10/32. BlackRock's iShares 20 Plus Year Treasury bond exchange traded fund fell to $122.23, its lowest level since January 13. The cash bond markets were closed on Friday for the US Veterans Day holiday.
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