The 10-year Treasury yield jumps to 4.46% after Trump wins and Republicans potentially win Congress

Treasury yields rose sharply on Wednesday as Donald Trump won the US presidential election against Vice President Kamala Harris, with a possible Republican victory in Congress also on the cards.

The 10-year Treasury yield jumped 17 basis points to 4.461%, hitting its highest level since July, as investors bet a Trump presidency would boost economic growth and government spending.

The two-year Treasury yield rose more than 8 basis points to 4.287%, reaching its highest level since July 31. One basis point is equal to 0.01%. Yields and prices have an inverse relationship.

NBC News predicted that Trump won the presidential election based on victories in North Carolina, Wisconsin, Pennsylvania and Georgia. NBC News also predicted that Republicans are expected to regain majority control of the U.S. Senate in 2025. The House of Representatives was still under debate, leaving the possibility of a Republican takeover open.

The general consensus on Wall Street leading up to the election was that bond yields could rise sharply in the event of a Trump victory and that they would rise sharply in the wake of a Republican wave that sees the party take control of Congress and the White House could increase. That's because Republicans may introduce tax cuts and high tariffs, measures that could boost economic growth but also widen the budget deficit and reignite inflation.

“If the Republicans win the House, the Senate and the presidency, I expect the bond market to be rocked,” Jeremy Siegel, a finance professor at the Wharton School of the University of Pennsylvania, said on CNBC's “Squawk Box” Tuesday. . “I assume they're worried that Trump would push through all these tax cuts, and I think bond yields would go up.”

Neither Trump nor Harris made any real promises of fiscal discipline during the campaign, fueling fears that investors will demand higher yields in exchange for holding Treasury bonds as the government is forced to issue more and more debt to finance its skyrocketing spending.

“Bonds are selling heavily across the yield curve as the Trump trade comes back into action,” wrote Byron Anderson, head of fixed income at Laffer Tengler Investments.

According to Stephanie Roth, chief economist at Wolfe Research, a Trump victory can expect a return of nearly 4.5%.

The benchmark 10-year Treasury yield rose 50 basis points in October, marking the largest monthly increase since September 2022.

The Federal Reserve will make its next interest rate decision on Thursday and is widely expected to cut interest rates by a quarter point.

—CNBC's Alex Harring and Sarah Min contributed reporting.