U.S. Treasury yields were lower on Monday as investors braced for a busy week that will see voters head to the polls for the U.S. presidential election and the Federal Reserve's next interest rate decision.
The yield on 10-year Treasury fell more than six basis points to 4.295%. The yield on the 2-year Treasury dipped nearly three basis points to 4.176%.
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One basis point equals 0.01%. Yields and prices move in opposite directions.
The moves come a day ahead of federal elections in the United States, including for president. NBC News' final poll of the election shows a "deadlocked" race between Vice President Kamala Harris and former President Donald Trump.
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Control of Congress will also be closely watched by traders, as split power in Washington could make it harder for either presidential candidate to enact their policies.
Monday's rate moves partially reversed a back-up in yields on Friday, which came despite a weak jobs report. Emily Roland, co-chief investment strategist at John Hancock Investment Management, said on "The Exchange" that election positioning could be responsible for these swings in the fixed income market.
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"Bonds just aren't acting like themselves," Roland said.
Investors are also focused on the Fed's interest rate decision at the central bank's policy meeting on Thursday. The decision will be followed by comments from Fed Chair Jerome Powell, which could provide hints about the Fed's expectations for the economy and interest rates for the coming months.
"The 10-year UST yield has risen several weeks and is testing downtrend resistance at 4.35%. The FOMC is expected to cut rates on Thursday, and we expect yields to decline below 4% by year-end eventually," Piper Sandler chief market technician Craig Johnson said in a note to clients.
Traders were last pricing in a 98% chance of a quarter-point interest rate cut, according to CME Group's FedWatch Tool. This follows the Fed's 50 basis point jumbo rate cut in September.
On the economic front, factory orders for September fell 0.5%, the Census Bureau said Monday. That matched economists' expectations, according to Dow Jones. The latest PMI, or purchasing managers index, is due out on Tuesday.
Correction: Emily Roland is co-chief investment strategist at John Hancock Investment Management. An earlier version misspelled her name.
