U.S. Treasuries Rise as Investors Weigh Midterm Gridlock and $5,000 Plan

U.S. Treasury securities rose Wednesday as investors expected Democrats to control Congress, raising the prospect of political gridlock that could limit federal spending. Falling stocks separately pushed investors toward safer assets, including Treasuries.

Investors were also relieved that a promised $5,000 payment to adult U.S. citizens might not be made. President Donald Trump had said the payment would go ahead if Republicans retained control of Congress. The plan was estimated to cost about $1.2 trillion, equal to 16% of the federal budget.

Andrew Lilley, Barrenjoey’s chief rates strategist, said investors had previously assigned the payment a 5% chance of happening and now viewed that risk as gone. He said implementing it would have triggered a catastrophic reaction in the Treasury market.

Investors also weighed whether AI regulation could slow economic growth and reduce the need for Federal Reserve rate hikes.