NEW YORK (CNN/Money) -
Bonds dipped on George W. Bush's victory Wednesday as money poured into stocks and traders anticipate greater government debt in the coming months. The fall, however, was tempered by rising oil prices.
The benchmark 10-year note fell 9/16 of a point to 100-31/32 to yield 4.12 percent, up from 4.05 late Tuesday, and the 30-year bond dropped 7/8 of a point to 107-15/32 to yield 4.87 percent, up from 4.81 percent late yesterday.
The two-year note shed 3/32 to 99-24/32 to yield 2.62 percent and the five-year note fell 9/32 to 99-31/32 to yield 3.38 percent.
Traders were taking their cue from stocks, which shot higher on expectations of more pro-business, tax-cutting policies from a victorious Bush. Flows into equities often come at the expense of safe-haven government debt.
Dealers also assume a Bush White House will be more likely to run high budget deficits, and so need to issue more Treasuries than a Democratic presidency.
"Bush is a spender and that means more supply," David Ader, interest rate strategist at RBS Greenwich
Capital, told Reuters. "We've got the refunding to come, and payrolls and the Fed next week, so the inclination is to sell into strength."
Wednesday morning, Treasury announced it would be borrowing $51 billion in its quarterly refunding auction due next week.
But rising oil kept bonds from falling further.
Oil prices jumped above $50 a barrel Wednesday on anticipation that a Bush victory will draw more supply from the market and funnel it into the Strategic Petroleum Reserve, perhaps further destabilize the middle east and support supply-side energy policies over conservation.
High oil prices usually help bonds, as traders believe it cuts economic growth and inflation by eating into consumer spending. Inflation erodes the value of the fixed-interest paying investment.
In the currency market, the dollar was mixed against the euro and the yen. The euro bought $1.2823, up from 1.2723 late Tuesday.
The dollar bought ¥106.21, up slightly from ¥106.15 late Tuesday.
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