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U.S. 10-Year Yield Drops to Lowest Since Before Trump’s Election

Benjamin Purvis and Vivien Lou Chen

(Bloomberg) -- The yield on the benchmark 10-year Treasury note fell to a level last seen before the 2016 election that made Donald Trump the U.S. president.

The rally in Treasuries drove the yield as low as 1.7075% Monday, below the level of 1.7145% it sank to during post-election trading on Nov. 9, 2016, when global investors sought a haven amid Trump’s unexpected victory. The yield then proceeded to surge in the weeks following the election as expectations built that his spending pledges would boost economic growth. The rate was above 2.6% by the end of that year and eclipsed 3% in 2018.

But the yield has since plummeted anew amid dimming inflation expectations and as investors bought Treasuries amid mounting trade friction. Traders have also boosted bets on Federal Reserve easing amid growing concern about the escalating rift between the U.S. and China. The 10-year yield, a benchmark for global borrowing, is down about a percentage point this year.

The 10-year yields drop to levels last seen before the 2016 election is about “technicals, fundamentals and uncertainties,” Russ Certo, managing director at Brean Capital, said in an interview. “Trade headlines are just one component of this in that they create greater uncertainty.”

Yields in other major economies have also dropped to record lows after China let the yuan slide Monday and asked state companies to suspend imports of U.S. agricultural products. China’s decisions reverberated across markets as a weakening of the yuan past the 7-per-dollar mark spurred speculation of a full-fledged currency war.

(Adds context on size of move)

To contact the reporters on this story: Benjamin Purvis in New York at bpurvis@bloomberg.net;Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net, Mark Tannenbaum, Jeremy Herron

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