* Election uncertainty pushes German 10-year yields fall to March lows
* Gap with 10-year Treasuries falls from March highs
* Portuguese 10-year yields fall to record low
AMSTERDAM, Nov 4 (Reuters) – German bond yields fell on Wednesday to their lowest since March and Portuguese yields plumbed record lows as uncertainty around the U.S. election outcome pushed investors to pare back bets on a Democrat-led fiscal stimulus package.
Safe-haven assets such as Bunds and Treasuries gained on signs the presidential contest could drag on, as the outcome appeared to rest on a handful of pivotal states that could take days to reach a final tally.
Republican President Donald Trump won the battleground of Florida and took the lead over Democratic rival Joe Biden in other U.S. swing states, but Biden voiced confidence he would win the election by taking three key Rust Belt states.
Germany’s 10-year bond yield, the region’s safe-haven benchmark asset, fell to its lowest since the coronavirus market rout in March at -0.671%. It was last down 4 basis points on the day.
“When it comes to fixed income, the close race with lower probability of a ‘blue sweep’ has sent interest rates lower as large fiscal spending becomes less likely,” said Lauri Halikka, fixed income and FX strategist at SEB.
Prior to the election, risk assets had rallied, pricing in a victory for Biden, who was expected to launch a large new stimulus package for the economy.
(For multimedia U.S. election coverage, click: here)
The gap between U.S. and German 10-year bond yields tightened to around 143 basis points as U.S. Treasury yields fell more than Germany’s.
The gap has widened in recent months as U.S. and European economic recovery diverged, touching 152 bps on Tuesday, the highest since March.
Riskier European government bonds also saw support, with Portugal’s 10-year yield touching a record low at 0.055% .
Italian bond yields slipped 1-2 basis points across the curve. .
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