Sell-off in US stocks drives funds to US Treasuries as traders bet on falling yields

On November 6, bond traders are betting that the US Treasury market will continue to rise as expectations for Federal Reserve interest rate hikes continue to cool. Following the US midterm elections, global stock markets faced a sell-off, prompting investors to turn to US Treasuries for safety, with the yield on the 10-year Treasury note falling to its lowest level since early September on Thursday. On Friday, the yield on the 10-year Treasury note was reported at 4.82%. The recent rise in the bond market has bolstered traders' confidence in further declines in yields. A trade in the options market is betting that the yield on the 10-year Treasury note could drop to 4.7% by the end of next week; another trade expiring on November 20 is betting on a yield drop to around 4.35%. Gennadiy Goldberg, head of US interest rate strategy at TD Securities, expects Friday's data to show slight weakness, but the market remains focused on economic fundamentals. He noted that the US economy remains strong, with the labor market showing a "low hiring, low firing" state, leading the market to significantly reduce expectations for interest rate hikes.

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