Bond Futures Yields Settle after Election Spike

November 10, 2016 4:33AM CST

Commodities futures markets initially plummeted after shocking victory equity futures soared yesterday after Hillary Clinton conceded the election to Donald Trump. Yields in Treasury futures initially spiked on Tuesday, and fell lower on Thursday as the commodities futures markets quieted.

The December contract in 30-year bond futures slid .40 percent at 156-11 in Thursday morning trading. The 10-year note futures contract for the same month was down .38 percent at 127-185, while the December 5-year note fell .18 percent to 119-262.

On Wednesday, the yield in the 30-year bond futures contract for December was at 2.86. Meanwhile, the 10-year note was yielding 2.07 percent. It was the biggest one day jump in the 10-year yield since Aug. 11, 2011. Reports say the jump could be a result of commodities futures markets’ belief that Trump's policies could spark a rise in inflation, more growth and ultimately higher interest rates.

The surge in bond futures yields was also due to the Treasury auction og $23 billion in 10-year notes. Analysts say bidders from other countries bid on less of the offer, while primary dealers took more. The 10-year auction stopped at 2.02 percent

The Federal Reserve is still currently seen raising interest rates at its next meeting in December despite the surprise election of Trump. Trump has publicly stated that Fed Chair Janet Yellen is lacking in her role, and analysts say he will likely pressure her to raise rates sooner, possibly in December, as opposed to later. The odds of a rate hike returned to 80 percent Wednesday, after dropping during the overnight session in commodities futures markets.

In U.S. economic data on Thursday, reports of relevance to the commodities futures markets include Weekly Jobless Claims dropped 11,000 to 254,000 for the week ended November 5, according to the U.S. Department of Labor. Economists had forecast a fall to 260,000 in the latest week. The report follows last Friday's October Employment Report for October, which showed a gain of 161,000 jobs and the unemployment rate falling to 4.9 percent compared to September’s rate of 5.0.

The October Treasury Budget is due this afternoon.

Friday is a light-volume trading day among commodities futures markets and equity markets, as some will be closed for the U.S. Veteran’s Day holiday. The University of Michigan Consumer Sentiment report is slated for release in the morning.

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