Treasury, European Government Bond Yields Rise as Markets Await U.S. Midterm Election Results — 2nd Update

By Emese Bartha and Paulo Trevisani

Treasury and European government bond yields rose Tuesday as U.S. voters go to the polls in the midterm elections, while oil prices rebounded from their sharp fall the previous day.

The two-year Treasury yield rose to 4.612%, up from 4.581% at Monday's settlement, while the 10-year Treasury yield increased to 4.948% from 4.893%, according to Tradeweb.

Polls suggest Republicans are set to lose their majority in the House of Representatives and could do so in the Senate as well, potentially making some aspects of governing more difficult for the Trump administration.

"Prospective Democratic legislative gains inject regulatory uncertainty around AI oversight and next year's debt-ceiling mechanics," Patrick Munnelly, market strategist at Tickmill Group, said in a note.

Meanwhile, U.S. labor markets had some reassuring indicators Tuesday. Job openings rose more than expected in September to 7.5 million from 7.2 million, while hiring held relatively steady, according to the Labor Department's monthly Job Openings and Labor Turnover Survey.

Job creation in the private sector is likely to have declined in October, according to forecasters polled by The Wall Street Journal. They expect ADP to report 75,000 added jobs, down from September's 90,000.

Markets will also be watching the Treasury quarterly refunding announcement Wednesday. The department projects slightly lower borrowing this quarter with an uptick in the first three months of 2027. Investors expect increasing reliance on short-term debt.

In Europe, the 10-year German Bund yield rose 1.4 basis points to 3.309%. French, Belgian and Italian government bonds underperformed due to concerns about fiscal challenges and high debt issuance in these countries.

The 10-year U.K. gilt yield increased 3.9 basis points to 5.230% ahead of Thursday's Bank of England decision, where a 25 basis-point interest-rate hike is widely expected.

For the bond markets, the midterm elections are likely to trigger short-term noise rather than a sustained repricing, Laura Cooper, head of macro credit and global investment strategist at Nuveen, said in a note.

"Their impact on the markets will depend largely on potential shifts in fiscal policy--a sphere where the scope for action appears limited, given the already strained debt dynamics and high financing costs," she said.

Initial results of Tuesday's midterm elections will arrive after the first polls close. A Democratic sweep of both houses of Congress looks like the most likely outcome but it isn't guaranteed, analysts said.

In the current bond-market environment, a divided government might offer investors some reassurance by limiting the scope for further fiscal expansion and easing pressure on long-dated Treasurys, even as political gridlock would do little to resolve the underlying deficit issue, Cooper said.

"The resulting higher term premium would likely also limit the potential for yields to decline," Cooper said. Short-dated Treasurys would remain primarily driven by the Federal Reserve's monetary policy and inflation dynamics, however, she said.

For longer-term investors, the elections have limited consequences, Seth Meyer, global head of client portfolio management at Janus Henderson Investors, said.

"The upcoming U.S. midterms may bring political change, but the secular drivers of returns play out over multiple election cycles," Meyer said.

Write to Emese Bartha at emese.bartha@wsj.com and to Paulo Trevisani at paulo.trevisani@wsj.com

(END) Dow Jones Newswires

November 03, 2026 14:50 ET (19:50 GMT)