Wall Street sees Democrats' decisive midterm win prompting traders to reassess
this year’s steep sell-off in US Treasuries. Tech stocks plunged on the
political shift, and markets now price a risk that the AI investment boom—which
has supported growth, lifted inflation and pushed yields higher via corporate
debt issuance—could slow. A divided government would also likely prevent
President Trump from enacting major tax or spending measures, easing some
concerns about the US budget deficit. Scott DiMaggio, head of fixed income at
AllianceBernstein, said: “AI has been the largest contributor to nominal GDP
growth, so any hit to growth could be positive for bonds. The market therefore
gains a layer of protection: if the economy falters, rates have substantial
downside.”
