U.S. Treasuries rose on Wednesday as investors priced in constrained federal
Spending and political gridlock amid expectations Democrats may sweep Congress.
Market participants also flagged the prospect that tighter AI regulation could
slow growth and lessen the need for further Fed rate hikes. Equity weakness
boosted safe-haven flows into bonds. Analysts markets said were relieved the
probability of former President Trump’s earlier pledge to pay $5,000 to each
U.S. adult — a plan amounting to about $1.2 trillion, roughly 16% of the federal
budget — has diminished. Barrenjoey chief rates strategist Andrew Lilly said
markets had previously assigned roughly a 5% chance to that scenario; he added
that the risk has now disappeared and implementation would have provoked a
catastrophic reaction in the Treasury market.
