Affected by the midterm elections, U.S. Treasury bonds rallied as markets expect government spending to be constrained.

On Wednesday, U.S. Treasury bonds rose. With the Democrats poised to take control of Congress, investors anticipate political gridlock in Washington that could limit government spending; meanwhile, artificial intelligence regulation may slow economic growth and reduce the need for Federal Reserve interest rate hikes. Analysts noted that markets also breathed a sigh of relief over the likely failure of former President Trump’s pledge to send $5,000 to every U.S. adult. Additionally, a decline in stock markets pushed investors toward safe-haven assets like Treasuries, further supporting the bond market. Trump had previously promised that if Republicans successfully retained control of Congress, he would distribute $5,000 to each adult U.S. citizen. The plan would have involved roughly $1.2 trillion, equivalent to 16% of the federal budget. Andrew Lilly, chief rates strategist at Barrenjoey, said: "While markets had previously viewed this scenario as having only a 5% probability, that risk has now disappeared. If implemented, the Treasury market would have faced a catastrophic reaction."