After experiencing a downturn in the previous session, the treasury market made a robust recovery on Monday. Although bond prices retreated slightly from their initial highs, they stayed solidly positive. Consequently, the yield on the benchmark ten-year note, typically moving inversely to its price, declined by 5.2 basis points to settle at 4.309 percent. This drop pulled the ten-year yield from the nearly four-month high reached last Friday.
Treasury securities served as a safe haven amidst the uncertainty surrounding the upcoming U.S. elections on Tuesday. Vice President Kamala Harris will be contesting against former President Donald Trump, and with polls indicating a fiercely competitive race, it's possible that the presidential outcome won't be clear on Election Day. The results of congressional races in the House and Senate are also anticipated to be pivotal, as they will influence the legislative capabilities of the next administration.
Market participants are also gearing up for the Federal Reserve's upcoming monetary policy decision, scheduled for announcement on Thursday. The Fed is widely anticipated to cut interest rates by an additional 25 basis points. However, traders will closely scrutinize the accompanying statement for insights into the potential for further rate reductions.
In addition, reports regarding the U.S. trade deficit and activity in the service sector are expected to draw attention on Tuesday, as traders keenly await the election results.
