10-year Treasury yield slides as traders mull over Democrats' midterm victories

The 10-year Treasury yield fell on Wednesday as investors weighed big wins from Democrats in the U.S. midterm elections.

The benchmark 10-year Treasury note yield was down more than 5 basis points at 4.898%. The 30-year bond yield declined more than 3 basis points to 5.293%, and the shorter-term 2-year note yield dropped more than 4 basis points to 4.573%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

Democrats obtained majorities in both the House and Senate. Democrats flipped Senate seats from Republicans in Iowa, Kansas, North Carolina, Ohio, South Carolina, Maine and Texas. They also won key gubernatorial races in Ohio and Texas.

The resounding victory by Democrats could rein in government spending from the Trump administration, as it makes it harder for the White House to push legislation through Congress.

Traders at JPMorgan said one of the issues Wall Street is focusing on after the midterms is "reduced deficit spending."

"This can be achieved by asserting power over the budget and likely wading through a government shutdown," they said.

For now, Jeffrey Klingelhofer of Aristotle Pacific believes that fixed income's broad market direction "remains intact." The managing director added that inflation "will continue to be a challenge."