By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose Tuesday, pushing 2-year yields to a new record low, as Americans cast votes that are expected to change the balance of power in Washington, D.C.
Yields on 10-year notes (UST10Y 2.60, -0.03, -0.99%) , which move inversely to prices, fell 4 basis points to 2.60%. A basis point is 0.01%.
Yields on 2-year notes (UST2YR 0.34, -.00, -1.15%) declined 2 basis points to 0.33%, after touching a new record low of 0.32%.
No major U.S. economic reports are scheduled for the session. As for the election, “a shift in power could be viewed by the risk market as favorable — taking the bid away from Treasurys,” said strategists at Nomura Securities.
“If there is a sense that there will be more fiscal help or eventual clarity on the tax code, the Fed might not need to go as heavy on servings of [quantitative easing] in the months ahead,” they wrote in a note. See more on what assets Fed may buy.
Also, the Federal Open Market Committee begins its two-day meeting. Investors expect officials to announce a major bond-buying program at the end of the meeting Wednesday. See more on Fed expectations.
“If you think the FOMC’s announcement will be bullish, you’re probably keen to buy” whether the market goes up or down, said strategists at CRT Capital Group.
For now, 10-year yields are very rangebound, with little technical direction to be gleaned between 2.42% and 2.75%, according to CRT.
Ten-year yields fell to their lowest level since January 2009 in the weeks after the September Fed meeting, when officials gave the first big hints that they were inclined to resume major Treasury purchases in the near future. See more on fed, bond yields.
