U.S. Government bonds remain volatile after Trump's surprise win; trend likely to persist for some time

The U.S. Treasuries remained highly volatile Wednesday following Donald Trump's surprise presidential election victory. Also, we expect the Treasury prices to remain volatile until market digests Trump’s victory completely.

The yield on the benchmark 10-year Treasury note rose 3-1/2 basis points to 1.896 percent, the yield on long-term 30-year Treasury jumped 10-1/2 basis points to 2.732 percent and the yield on short-term 2-year note slid 5 basis points to 0.814 percent by 12:00 GMT.

The United States Republican candidate Donald Trump pinned his victory against Democrat opponent Hillary Clinton in the 2016 presidential election. Trump's anti-trade stance would jeopardise trade with China and other emerging market economies. His anti-immigration policies could also create labour shortages in the U.S. economy. Business confidence would take a hit and new downside risks to the economy are likely to reduce the probability of a December rate hike by the Federal Reserve.

Trump’s victory is the latest political shock to financial markets, following the U.K.’s June vote to leave the European Union. Also, Trump, who compared his candidacy to the Brexit vote, has criticized Yellen, saying she kept rates too low during Obama’s tenure, and suggested that if he won he’d probably nominate someone else to lead once her term expires in 2018, reported Bloomberg.

Markets now look ahead to another light session in terms of data on Wednesday, highlighted by preliminary wholesale sales data, followed later by a 10-year note auction.

Meanwhile, the S&P 500 Futures traded 40.75 points lower at 2,095 by 12:20 GMT.