By Carolyn Cui

U.S. government bonds sold off sharply as investors were coming to terms with a Donald Trump presidency.

The Republican nominee rode a national wave of populism and scored a stunning come-from-behind win to become the 45th president of the U.S., defeating political veteran Hillary Clinton.

The $13-trillion U.S. Treasury market has been swinging wildly since Tuesday night. The benchmark 10-year Treasury yield plunged to as low as 1.716% around midnight Eastern Time as the Republican nominee took down several battleground states and widened his lead in the race, triggering a stampede into haven assets. Sentiment took a turn at the crack of dawn, as investors flew back into risky assets battered overnight, ditching safe assets.

The 10-year yield is currently trading at 1.975%, the highest level since March.

"The initial reaction was definitely a negative one just because of the shellshock. Now, the markets are starting to ask themselves what kind of a president Trump will be," said Gennadiy Goldberg, a U.S. rates strategist at TD Securities.

The selloff in the Treasury market suggested the markets were hoping Mr. Trump would focus on the positive parts of his agenda, including pro-growth spending and tax cuts. His acceptance speech gave investors some degree of encouragement that "he might actually be a better candidate than they initially priced for," he said.

The steepening in the Treasury curve is a sign of such a market belief, analysts said. The gap between the two-yearand 10-year Treasury note yields increased to 1.124 percentage points, up from 1.005 percentage points Tuesday.

The sharp steepening in the curve "is very consistent with expectations for a stimulus package and tax cuts," suggesting lower government revenue and higher outlays, Mr. Goldberg said.

Prices for short-term bonds rose, driving yields down from three-month to two-year, as a Trump presidency has made it less certain for a December rate increase by the Federal Reserve. In the Fed-fund futures market, the odds for a December Fed rate increase fell to 71% from 81% a day earlier, according to data from CME Group.

Other analysts argue it's still too early to tell what a Trump presidency eventually would mean for the economy or the trajectory of interest rates. "The overall theme, no matter what you think the direction will be, is just uncertainty," said Thomas Simons, vice president at Jefferies LLC.

Write to Carolyn Cui at carolyn.cui@wsj.com

(END) Dow Jones Newswires

November 09, 2016 10:39 ET (15:39 GMT)

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