Markets are starting to care about the 2026 midterm elections, which loom 10 weeks away and could rip full control of Congress from President Donald Trump and the Republican Party.

Democrats are favored to win at least one chamber of Congress come November, leading the generic ballot by roughly 6 percentage points according to FiftyPlusOne, a website that tracks poll results. A divided Washington would likely block lawmakers from passing any major non-bipartisan measures while turning the legislative branch’s most basic tasks into a drawn-out negotiation.

Analysts detailed to CNBC how a full or partial shift in power from Republicans to Democrats in Congress could affect the country’s capital markets. Potential outcomes include a lengthy standoff over raising the debt ceiling, more whipsawing executive actions and potential volatility if there’s a protracted wait for election results.

The most prominent of Trump’s market-moving executive actions is his tariff campaign, which drew on untested emergency authority to impose sweeping levies on a swath of countries. Although the tariffs imposed under the International Emergency Economic Powers Act were eventually ruled unconstitutional by the Supreme Court, they remained on the books for over a year and weighed heavily on markets. And Trump has been replacing the tariffs that were rebuffed with new ones using different executive authority.

Treasury yields moved lower Monday as investors look ahead to Federal Reserve Chair Kevin Warsh’s keynote speech at Jackson Hole, which takes place later this week against a backdrop of bond market pressure, stubborn inflation and soaring U.S. national debt.

Yields on the 10-year Treasury note — the main benchmark for mortgages, auto loans and credit card debt — were more than 2 basis point lower at 4.7120%.

The 30-year Treasury yield also dropped more than 2 basis points to 5.2497%. The yield on the 2-year Treasury note, which typically reacts in line with short-term Federal Reserve interest rate decisions, was more than 1 basis point lower at 4.2209%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

Yields on both the 30-year and 10-year notes ended Friday up more than 3 basis points.

Borrowing costs hit multi-decade highs last week as the Treasury Department, led by Scott Bessent, unveiled an extended debt buyback program aimed at easing pressure on the long-end of the yield curve. Yields initially fell before rebounding higher.

Central bankers and economists will gather at the annual Jackson Hole Symposium this week, with traders looking ahead to Federal Reserve Chair Kevin Warsh’s keynote address, due on Friday, as sustained inflation pressures and the U.S.’s $40 trillion debt loom over the event.

Warsh’s speech will follow a raft of fresh economic data releases this week, including July core PCE price index — the Fed’s preferred inflation gauge — and the second quarter GDP estimate.

Longer-dated U.S. government bond yields moved higher on Friday as investor jitters over the Treasury Department’s extended debt repurchase program and soaring national debt continued to hover over markets.

The yield on the 30-year U.S. Treasury bond, one of the targets of the buyback plan, rose more than 3 basis points to 5.273%. A week ago, the long bond yielded 5.21%.

The 10-year U.S. Treasury yield — the key benchmark for mortgages, auto loans and credit card debt — was up more than 3 basis points at 4.734%. Last Friday, the 10-year yielded as little as 4.63%.

The shorter-dated 2-year Treasury note yield, which more closely tracks short-term Federal Reserve rate expectations, was higher by more than 4 basis points at 4.232%. A week, the two-year low yield was about 4.10%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

Borrowing costs rebounded sharply Thursday, with both 10-year note and 30-year bond yields rising more than 5 basis points.

That wiped out the 10-year yield’s decline from Wednesday, when Treasury Secretary Scott Bessent intervened in the government bond market, ramping up in repurchases and aiming at easing pressure at the long end of the curve.

Traders are now looking ahead to Federal Reserve Chairman Kevin Warsh’s upcoming speech at Jackson Hole Economic Policy Symposium, where he could offer insights on longer-term yields and the central bank’s independence.

“The rise in bond yields and the Treasury’s purchases all set the stage for what will be a very important Jackson Hole speech next week, which gives Warsh the opportunity to talk to markets, which are in need of more clarity on the central bank’s plans,” said Paul Stanley, Arca managing director and founding advisor.

“It seems as though Warsh wants the market to do the tightening for the Fed, and that’s really what is happening with the recent surge in bond yields,” he added.

Traders will also get the latest reading on the personal consumption expenditures price index, which is slated for release next Wednesday.

Bond yields climbed Thursday morning, erasing most of the pullback they saw the previous day after the Treasury Department announced an intervention aimed at easing pressure on longer-dated government debt.

The yield on the 30-year U.S. Treasury bond — the primary focus of the accelerated buyback — was up more than 4 basis points at 5.236%.

Yields on 10-year U.S. Treasurys — the main benchmark for mortgages, auto loans and credit card debt — moved more than 4 basis points higher to 4.696%.

The 10- and 30-year yield levels were right around the level they held before the 8:30 a.m. announcement Wednesday that Treasury would be stepping up its bond buyback program.

The yield on the 2-year Treasury note, which more closely follows short-term Federal Reserve rate decisions, was last seen up more than 2 basis points at 4.20%.

One basis point equals 0.01%, or 1/100th of 1%, and yields and prices move inversely to one another.

The moves underscored the difficulty of market interventions, particularly at a time when U.S. debt faces a slew of factors that have been pressuring yields higher.

In a move announced Wednesday morning, the Treasury Department, led by Secretary Scott Bessent, announced it would at least double the size of its government debt buybacks, starting Sept. 9 and running through Nov. 4.

Yields tumbled following the announcement, with the 30-year down about 10 basis points after previously hitting its highest in about 19 years, predating the global financial crisis in 2008.

However, the trade quickly unwound, with yields higher Thursday as the market digested the move, as well as the longer-term structural problems facing the fixed income market.

The interventions “belie the underlying structural challenges and do nothing to address them,” Maia Crook, senior research analyst at JPMorgan Chase, said in a client note. “While [Wednesday’s] action forced some decline in longer-dated yields, the more lasting impact is the potential for higher risk premia reflecting a Treasury Department that is intervening in the market and moving away from its ‘regular and predictable’ tenet.”

The announcement came the same day that Treasury updated the national debt total, which pushed past the $40 trillion mark. At the same time, the market has faced stiff competition from record corporate debt issuance tied to the artificial intelligence buildout, all of which has contributed to rising term premiums, or the extra yield investors demand to hold U.S. government paper.

Traders were also digesting the latest Federal Open Market Committee minutes from July, released Wednesday. Officials at the meeting indicated that higher interest rates likely would be needed if there isn’t more progress on inflation. Economic data released since the meeting have shown modest monthly price increases, though inflation remains above the Fed’s 2% target.

On Thursday, the Philadelphia Fed’s manufacturing index…

BEIJING — Chinese government bonds can play an important role in portfolio diversification as they are likely to continue behaving differently from other countries’ debt, strategists say.

China’s yields have edged down in recent months even as benchmarks in the U.S., Japan and the U.K. surged to multi-decade highs. That reflects how the world’s second-largest economy remains insulated from global capital markets — and faces a deflationary environment, in contrast to inflation worries elsewhere.

“We see room for China bonds to outperform developed-market peers on a risk adjusted basis, with supportive macro policies and strong export growth to help support demand for central government bonds,” said Norbert Ling, head of fixed income portfolio management for Asia Pacific at Invesco. “CGB are still providing positive real yields, with defensive characteristics that have a role to play in global bond portfolios.”

China has been dealing with a severe property-market downturn and deflation, which has kept the People’s Bank of China accommodative. The country on Monday reported disappointing retail sales and industrial production growth for July, fueling hopes for more rate cuts and stimulus. That is likely to keep its bonds on a different path from those of other major markets.

“The latest July macroeconomic activity data from China came in weaker than market expectations, suggesting that domestic demand may take longer to recover,” said Chun Lai Wu, head of Asia asset allocation at UBS GWM Chief Investment Office. “We expect the PBoC to remain supportive through liquidity operations and targeted credit measures”

Chinese government bonds offer “valuable diversification benefits within a strategic multi-asset portfolio” for global and Asian investors, Wu added.

Charu Chanana, chief investment strategist at Saxo, agrees. Other major central banks like the European Central Bank and Bank of Japan have been hiking interest rates.

“For global portfolios, CGBs can still play a diversification role because China’s rate cycle is increasingly distinct from the U.S., Europe and Japan,” she said in an email.

Treasury yields pulled back slightly on Wednesday from multi-year highs seen in the previous day, as a sell-off at the long end of the curve eased investor jitters. 

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — fell more than 1 basis point to 4.69%.

The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, fell more than 1 basis point to 4.16%. 

The longer-dated 30-year Treasury bond yield fell more than 1 basis point to 5.274% after notching a new 19-year high on Tuesday at over 5.33%.

One basis point is equal to 0.01%, and yields and prices move inversely to each other.

The moves were part of a wider sell-off in long-dated global bonds on Tuesday. Japan’s 10-year bond yield reached its highest level in three decades. German 30-year bund yields hit their highest point since 2011, while rates on France’s 30-year bond reached the highest going back to 2008. 

The U.S. fiscal deficit jumped to $432.3 billion in July, its highest monthly total since March 2021, pushing the year-to-date shortfall to nearly $1.8 trillion. Interest paid to finance the nearly $40 trillion national debt has cost the Federal government about $1.2 trillion this year. 

Meanwhile, negotiations between Washington and Tehran to end the war have stalled, with little sign that talks will resume.

“Investors are watching the unfolding situation in the Middle East and factoring in the potential of an inflation spike that runs hotter and lasts longer than had previously been hoped,” wrote AJ Bell’s head of financial analysis Danni Hewson on Tuesday.

Elsewhere on Wednesday, the latest Federal Open Market Committee meeting minutes are set for release in the afternoon. Investors will likely take a keen eye to the minutes, given the sharp divisions within the central bank. At the July meeting, there were three dissenters voting to hike rates, a division that investors will seek greater detail on.

— CNBC’s Sarah Min contributed to this report.

Against a backdrop of persisting inflationary pressures, yields on longer-term bonds have been climbing, which experts say is likely to keep borrowing costs elevated — particularly for long-term fixed-rate loans such as mortgages.

The yield on the U.S. 30-year Treasury bond hit 5.323% on Tuesday, a 19-year high, before edging down to just below 5.3%. The 10-year Treasury yield — a key benchmark for fixed mortgage rates and other longer-term loans — is above 4.7%. That compares to below 4% before the start of the Iran War at the end of February.

“The higher bond yields on long-dated securities, like the 30-year Treasury, clearly indicate discomfort over persistently high inflation in the future,” said Lawrence Yun, chief economist for the National Association of Realtors. 

The annual rate of inflation was 3.4% in July as measured by the consumer price index, far above the Federal Reserve’s target of 2%. Before the war, in January, the annual inflation rate was 2.4%.

Since 15- and 30-year fixed-rate mortgages typically follow the lead of Treasury rates, higher yields have already been pushing up mortgage rates. The average rate for a 30-year, fixed-rate mortgage was 6.75% as of Tuesday, after finishing last week at 6.69%, according to Mortgage News Daily.

“The impact on mortgage rates is directly related to higher bond yields,” Yun said. “Independent of the Federal Reserve policy, higher inflation and higher overall long-term borrowing costs will mean higher mortgage rates.”

He said consumers should not expect any meaningful decline in mortgage rates.

Last week’s “favorable economic data provided only temporary relief,” said Jeff DerGurahian, LoanDepot’s chief investment officer and head economist. Higher energy prices stemming from the Iran conflict remain “an important part of the inflation picture,” he said.

“Longer-term bond investors may need more evidence that the post-pandemic inflation cycle is truly behind us and that the economy is returning to a slower-growth, slower-inflation environment before 10- and 30-year Treasury yields move meaningfully lower,” DerGurahian said.

In the meantime, there are ways to offset today’s higher rates, experts say.

“Some may want to consider shorter-term mortgage rates, like seven-year [adjustable-rate mortgages], which lock in fixed mortgage payments for the first seven years of the loan before readjusting,” Yun said. “These shorter-duration loans are ideal for those who are more certain they will move to another home within that seven-year timeframe.”