By Carolyn Cui

The U.S. Treasury market was little changed in subdued trade on Tuesday, as millions of Americans were casting their ballots for a new president.

Bond traders are closely watching the polls and early voting results on Election Day, the culmination of a tight presidential race between Democratic nominee Hillary Clinton and Republican Donald Trump. But the final results aren't expected to come in until late in the evening, as the polls in some of the tossup states, such as Nevada and Colorado, have late closing times.

"Everyone is keeping their cards close to their chests," said Gennadiy Goldberg, a U.S. rates strategist at TD Securities in New York, adding that volumes are lowerthan average. "It feels like we're stuck in the waiting room, with nothing to do."

In recent trade, the yield on the benchmark 10-year U.S. Treasury notes was at 1.823%, down slightly from 1.826% on Monday. Bond yields fall when prices rise.

On Wall Street, a Clinton victory is the baseline scenario for the majority of analysts, which is considered a less risky outcome in terms of maintaining the status quo. Recent economic reports also suggested a continuation of slow but steady economic expansion, supporting the Federal Reserve's case for normalizing monetary policy. And a Clinton win, analysts say, will clear a hurdle for the Fed to raise rates.

Tuesday, fed-fund futures, a popular derivative market for hedge funds and money managers to bet on the U.S. interest rate policy, showed 76.3% odds that the Fed would raise rates by its December meeting, up from 71.5% a day earlier, according to data from CME Group.

"Our expectation is that the normalization process of interest rates will remain in place," said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management Inc.

Once the election is over, the broad markets are likely to stage "a relief rally," Mr. Stoltzfus said. Both sides have "grown increasingly desirous and eager to get this thing over and move on," as they are exhausted by the contentiousness of this year's electoral process, he said.

The short-end of the Treasury curve is on the move. The yield on three-month Treasury bills continued to soar in Tuesday's trading, hitting a fresh eight-year high of 0.426%, a reflection of the market's firm belief of a rate increase at the Fed's December meeting.

The yield is an accumulation of expected overnight rates over the next three months. "You're getting a higher and higher weight on the higher post-Fed meeting rates, as time goes on," said Thomas Simons, a money-market economist in the fixed-income group at Jefferies LLC. The Treasury's recent outsized issuance of short-term papers also contributed to the weakness in the front-end of the curve.

The 10-year Treasury yield started the year at around 2.3%, when investors were expecting as many as four rate increases over the course of 2016. But the U.S. yield tumbled amid concerns about a weakening global economic outlook that have pushed benchmark rates in many countries below zero.

The benchmark 10-year yield dropped to a record low at 1.365% in early July after the U.K's vote to leave the European Union. Bond yields have since been creeping up as central banks began to question the benefits of further monetary easing.

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

(END) Dow Jones Newswires

November 08, 2016 10:48 ET (15:48 GMT)

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