Investors turned to Treasury securities ahead of the midterm elections, with 30-year yields falling below 5.3% and 10-year yields moving toward 4.9%. The prospect of a divided Congress and a spending gridlock reduces the likelihood of major new spending packages and increased government borrowing. Wall Street also anticipates greater volatility in equities, particularly in technology and sectors sensitive to regulation. Meanwhile, a federal deficit expected to reach 6% to 7% of GDP and annual debt-interest payments exceeding $1 trillion are fueling fiscal concerns, while the probability of a government shutdown jumped to 45% on Kalshi.
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