Julius Baer chief investment officer Andrew Jackson said in a note that after
Republicans lost majority control of both chambers of Congress, a divided
government — with different parties controlling the two houses — could support
U.S. Treasuries by limiting further fiscal expansion. He warned, "Blocking new
spending is not the same as reducing the existing fiscal deficit." Jackson said
persistent deficits and heavy Treasury issuance could still cap downside in
long-term U.S. yields even if Congress increases checks on the Trump
administration. He added that inflation dynamics and Fed policy are likely to
matter more for the bond market than the election outcome, and a renewed rise in
energy prices would complicate the outlook.
