Context:

Treasury yields drifted lower across the curve as investors priced in the midterm results and awaited jobs data, with the 10-year around 4.87% amid a shift in policy expectations after Democrats won back Congress. The move followed a sharp retreat the previous session and comes as oil prices retreat on prospects of lessened Iran-related tensions, influencing global yields. Traders are awaiting weekly jobless claims and Friday's nonfarm payrolls figure to gauge the labor market’s impact on policy. The environment remains dominated by inflation concerns and central-bank outlooks, with energy supply constraints continuing to shape risk sentiment. Looking ahead, markets will weigh employment data against the political backdrop to determine the trajectory of rates.

Dive Deeper:

• At 4:11 a.m. ET, the 10-year Treasury yield was roughly 3 basis points lower at 4.865%, the 2-year was flat at 4.581%, and the 30-year declined 3 basis points to 5.245%.

• The moves come after the Democrats won control of Congress, altering policy expectations for the remainder of President Trump’s term and contributing to initial shifts in fixed-income pricing.

• Oil prices fell as expectations of reduced escalation in Iran suggest a lower risk of supply shocks, a factor that has pressured government bond yields lower this session.

• Traders are positioning ahead of data, with weekly jobless claims released soon and October’s nonfarm payrolls data due on Friday, to inform the strength of the labor market.

• Energy constraints and ongoing inflation concerns keep a hawkish tone among central banks, supporting a cautious approach to further yield declines despite the recent pullback.