US yields climb as investors await election outcome
Updates at 0105 GMT
By Gertrude Chavez-Dreyfuss, Saeed Azhar
NEW YORK/SINGAPORE, Nov 6 (Reuters) -U.S. Treasury yields climbed in early Asia trade on Wednesday, as investors keenly awaited results of a tightly contested U.S. presidential race while some trades reflecting a victory by Donald Trump picked up.
Treasury yields rose across the board after online prediction markets started to favour Republican candidate Trump again over Democratic nominee Vice President Kamala Harris for the nation's top job, but the outcome remained uncertain with critical battleground states unlikely to be called for hours or even days.
The benchmark 10-year Treasury yield US10YT=RR climbed roughly six basis points to 4.345% in the early Asian session on Wednesday, hovering close to a four-month high it hit at the start of the month.
The two-year yield US2YT=RR ticked up 4 bps to 4.2408%.
Republican Donald Trump won eight states in Tuesday's U.S. presidential election while Democrat Kamala Harris captured three states and Washington, D.C., Edison Research projected.
Online betting sites such as PredictIt, Kalshi and Polymarket all show Trump ahead, although national polls remain too close to favour any candidate.
"The early indications are Republicans are outperforming in areas where they haven't traditionally, in places like Miami Dade," said Jamie Cox, managing partner at Harris Financial Group.
"I would imagine that at this particular moment, the Harris camp is worried. The markets are reflecting that we might know the answer sooner, rather than have to wait multiple days to have the answer to the election."
Trump's economic plan, which includes imposing tariffs on European and Chinese imports, is likely to reaccelerate inflation and add to the massive U.S. fiscal deficit. That means more issuance of U.S. government debt to bridge the deficit, a scenario likely to flood the market with Treasuries leading to a spike in yields.
In other maturities, the yield on the 30-year Treasury note US30YT=RR jumped 9 bps to 4.5402%. The five-year yield US5YT=RR advanced 5.8 bps to 4.2301%.
Yields were further supported by data showing U.S. services sector activity unexpectedly advanced in October to a more than two-year high while employment firmed, reinforcing the resilience of the world's largest economy.
"Economic data has painted a resilient picture for the U.S. economy," said Chip Hughey, managing director of fixed income at Truist Advisory Services in Richmond, Virginia.
"That runs counter to the idea that the Fed will cut rates aggressively... We saw strong ISM services data that justifies the string of reports that we have seen for the last six weeks that the economy continues to chug along nicely."
Reporting by Gertrude Chavez-Dreyfuss and Saeed Azhar; Editing by Richard Chang and Christopher Cushing
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