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Democrats are heading for electoral victory in Georgia. Investors are selling US government debt.
Democrat Raphael Warnock is named winner of the first Senate seat on Georgia’s reelection. Investors believe that democratic policies will lead to higher interest rates. It shows the prices in the market.
JIM WATSON / AFP
The yield on US government bonds with a ten-year maturity is 1.0119 percent, after a sharp rise overnight, according to figures from Infront and Bloomberg. This is the first time that interest rates have risen above the 1 percent limit since March.
Danske Bank believes the reason is that “the Democratic Party is on track to win the two Senate elections in Georgia,” writes the bank’s analytics department on Twitter.
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Credit analyst Pål Ringholm at Sparebank 1 Markets says the market appreciates that Democrats get both houses of Congress.
“Investors believe right now that there is a 96 percent chance that Democrats will win,” Ringholm said by phone with E24.
Possibility of higher inflation
– What is the connection between the Georgia elections and the “ten-year-old boy”?
– To explain it, we can go back a bit, even before the presidential elections. Then there was a lot of talk in the interest rate environment about “the blue wave,” a term that plays on the color of the Democrats. It was about the fact that if the Democrats won both houses of Congress, it would be possible to imagine a greater likelihood of a larger package of measures.
– In the next round will increase interest rates: investors believe that what comes from politics will help raise interest rates even more. They sell government bonds because they think it is no longer such a safe haven.
Head of Analysis Kreditt Pål Ringholm at Sparebank 1 Markets.
CF-WESENBERG
Ringholm emphasizes that it is not that simple, but that these are the main lines.
DNB Markets senior economist Kyrre Aamdal notes that US government long-term interest rates rose yesterday afternoon and have continued well into the night.
Investors may now be pricing in a certain probability of higher inflation with a Democratic majority in Congress, Aamdal writes in the morning report.
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Here’s how Georgia elections can affect markets
Named winner
The polls in Georgia closed at 1 p.m. Norwegian time on Wednesday. He ranks between Democrats Jon Ossoff and Raphael Warnock, and Republicans David Perdue and Kelly Loeffler, respectively.
At eight o’clock in the morning on Wednesday, Warnock has been named the winner of the elections for one of the two Senate seats. This is confirmed by NBC, CBS and the AP news agency.
In the election between Ossoff and Perdue, the race is almost dead, with a narrow lead for the Democratic candidate when 97 percent of the vote is counted, according to the New York Times. The counting of votes has been interrupted and will continue on Wednesday morning local time. The result is expected to be ready only at 12 local time, which is 18 Norwegian time.
