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U.S. 10-Year Treasury Yield Hits 1%

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An election worker counts absentee ballots in Atlanta.

An election worker counts absentee ballots in Atlanta.

Photo: elijah nouvelage/Reuters

The yield on the benchmark 10-year U.S. Treasury note hit 1%, after incoming returns from Georgia’s closely watched runoff elections fueled bets that Democrats could win narrow control of the Senate.

In early afternoon in Hong Kong on Wednesday, the yield on the benchmark 10-year U.S. Treasury note was precisely 1.000%, according to Tradeweb, up from 0.955% at its 3 p.m. ET close on Tuesday.

Yields, which rise when bond prices fall, started climbing at about 7:30 p.m. ET as early returns from the elections started trickling in, showing extremely tight races but better-than-expected results for the Democratic candidates.

Wins in both races would effectively give Democrats 51 votes in the Senate, when counting the tiebreaking vote of Vice President-elect
Kamala Harris

—an outcome that many investors think would herald greater spending on pandemic-relief efforts and other Democratic priorities such as infrastructure projects.

Increased government spending without corresponding tax increases tends to push up Treasury yields partly because it portends more government borrowing and a larger supply of bonds. Depending on the type of spending, it can also drive yields higher by boosting economic growth and inflation and making it more likely that the Federal Reserve will raise short-term interest rates.

Write to Sam Goldfarb at sam.goldfarb@wsj.com