As of this writing, the December 10-year is trading sharply higher, currently 138-26 and had a range overnight if 137-205 to 139-01.  As Globex opened last night, we saw the price plummet right out of the gate on early indications that Biden was ahead, albeit was just as many polls were closing. Traders sold the note because as Biden was leading early, traders view that a Biden stimulus package is going to be significantly larger than Trump’s, hence adding to more money in the people’s hand which will lead to more of the inflation trade. As soon as Mitch McConnel was announced as the winner of the Senate race in Kentucky, we saw the note shoot up as investors immediately sensed gridlock as the republicans retained control of the senate and the note market has continued to be very strong still with the yield on the 10 year at .778 after reaching a high .945 early last night. Currently, we still do not know who won as some key states have not finished counting all ballots. Trump did have a news conference late last night and gave people the hint that he is ready, waiting in the wings to contest the election if Biden does eventually win. If that does happen, the market hates uncertainty and I would expect the note complex to continue to have a bid as long as a winner is not declared.

30yr Note Dec ’20 Daily Chart
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Greg Perlin

Senior Market Strategist

Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.

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