SINGAPORE: US Treasuries struggled to make headway on Thursday, as traders reflected on Donald Trump’s victory in the US presidential election that have fuelled fears his economic policies could dent the US balance sheet and stoke inflation.

The benchmark 10-year Treasury yield was little changed at 4.4236%, hovering near a four-month high hit in the previous session.

Yields rise when bond prices fall.

The two-year yield dipped 1.5 basis points but was similarly not far from Wednesday’s three-month high of 4.3120%.

Trump campaigned on a platform of tax cuts, which economists say would juice the economy, widen budget deficits and increase government borrowing.

He also touted tariffs, which analysts expect to stoke inflation and reduce the Federal Reserve’s scope to cut interest rates.

Further bolstering yields, Republicans won control of the US Senate.

Investors were still awaiting results in the House of Representatives, and Republican control would clear the path for Trump’s agenda.

“It is critical to continue to track the US Treasury market, and whether bond yields continue to ratchet higher,” said Saxo’s chief macro strategist John Hardy.

“At some point, higher yields could begin to act as a headwind on equity prices, especially if they threaten to rise back to the highest levels seen last year.

“Further, how will the (Fed) behave now that the US election outcome is known? Any inflationary resurgence will remove further policy easing expectations.”

The Fed announces its policy decision later on Thursday and a 25-basis-point rate cut is fully priced in, though traders have since pared back bets on the scale of future monetary easing by the US central bank.

Money markets now see the Fed cutting its policy rate only twice in 2025, lowering it to the 3.75%-4% range and likely taking until July to do so.

“Given our view that the neutral rate lies around 3.50%, Trump’s return to the White House likely means that the Fed needs to keep rates above this level,” said George Brown, senior US economist at Schroders.

US stocks dip after mixed earnings

The yield on the 30-year Treasury note retreated 13 bps to 4.4691%, after surging to its highest since late May in the previous session, underscoring concerns about future borrowing.

The five-year yield last stood at 4.2672%.

The US yield curve steepened further on Thursday, with the gap between two-year and 10-year yields hitting 16.80 bps.

The curve has been on a steepening trend for the last few months, a scenario that occurs when the Fed is cutting interest rates.