Treasuries Fall Sharply Amid Concerns About Inflation Under Trump

(RTTNews) - Treasuries moved sharply lower over the course of the trading session on Wednesday as traders reacted to the results of the election.

Bond prices moved steadily lower throughout much of the day before closing firmly in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged up by 21 basis points to 2.072 percent.

With the substantial increase on the day, the ten-year yield reached its highest closing level in nearly ten months.

The sell-off by treasuries came on the heels of Republican presidential nominee Donald Trump's surprise victory in the race for the White House.

Trump managed to pull an upset over Democratic rival Hillary Clinton after winning several key battleground states, including Florida, Pennsylvania, and Ohio.

The billionaire-turned-politician vowed to unite the country in his victory speech, but investors remain wary about how some of his policy proposals will play out in reality.

Treasuries came under pressure amid concerns that Trump's calls for protectionist trade policies and increased infrastructure spending could lead to higher inflation.

Weak demand for the Treasury Department's auction of $23 billion worth of ten-year notes also weighed on treasuries.

The ten-year note auction drew a high yield of 2.020 percent and a bid-to-cover ratio of 2.22, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.56.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Trading on Thursday may continue to be impacted by reaction to the shocking election results, although traders will also be presented with a report on weekly jobless claims.

The Treasury is also due to finish off this week's series of long-term securities auctions with the sale of $15 billion worth of thirty-year bonds.