U.S. Treasury yields rose modestly on Tuesday as investors braced for the presidential election and reacted to economic data. By 11:20 a.m. ET, the 10-year Treasury yield increased by over 5 basis points to reach 4.364%, while the 2-year Treasury yield also saw a similar rise, hitting 4.23%. This uptick came after the Institute for Supply Management (ISM) reported its highest services PMI since July 2022, with a reading of 56.0, exceeding expectations of 53.7. Yields and bond prices generally move inversely, with this latest data indicating stronger-than-expected activity in the services sector.

The final stretch of the election has the nation’s focus, as polls show a close race between Vice President Kamala Harris and former President Donald Trump, both polling at 49%. The outcome of the election could shape fiscal policies, especially if one party controls both Congress and the White House. A divided Congress, on the other hand, may lead to more gridlock. Additionally, the Federal Reserve’s policy meeting on Thursday has investors anticipating a quarter-point rate cut, following a significant half-point reduction in September.