A divided government could shift the bond market

Marketplace reported that Treasury yields have risen partly because federal debt has exceeded $40 trillion, requiring more bond issuance while investor demand has become more saturated. Wharton’s Peter Conti-Brown said investors are charging a higher premium, especially for long-term debt. Charles Schwab’s Cooper Howard said divided government could impose fiscal restraint by making major spending bills and tax cuts harder to pass, reducing borrowing and yields. Lower Treasury yields would generally reduce corporate-bond, consumer-loan and mortgage rates. Duke’s Campbell Harvey also said Democratic influence over Federal Reserve appointments could reduce the risk of political pressure driving inflation. However, failure to agree on government funding could cause a shutdown and, in an extreme case, raise fears of default and send yields higher.

Wyoming voters overwhelmingly rejected a proposal to cut property taxes by 50 percent. Hank Hoversland of the Wyoming Taxpayers Association said residents remembered an earlier cut that contributed to library closures, slower emergency services and difficulty maintaining fire equipment. Florida voters instead approved an exemption covering up to $250,000 of a home’s value, potentially removing billions of dollars from county and city budgets each year. The Tax Foundation’s Jared Walzak said Florida could respond by cutting spending, raising rates on remaining property or increasing other taxes and fees. University of Chicago professor Christopher Berry said higher rates on expensive property could benefit owners of lower-valued homes, whose property taxes have become a major cost as home values rose.

Daniela Velasquez de Leon, general manager of San Diego-based Organics Unlimited, said sales were good but bananas’ low margins left little room to absorb geopolitical cost increases. Corrugated-box prices rose about 10% in Mexico and as much as 50% in Ecuador; plastic used to protect the fruit rose 25%, while fuel affects transportation, fertilizer and packaging. Because bananas are sold under annual contracts, the company tries to find efficiencies rather than immediately pass costs to retailers, though the industry—including Del Monte, Fyffes and Dole—has warned that logistics costs threaten future quality and supply. Velasquez de Leon said her family business is diversifying into papayas and eventually coconuts, while she remains optimistic about the business and the ongoing USMCA renegotiation.

U.S. stocks rose after the election, consistent with the historical tendency for markets to gain when political uncertainty declines: the Dow added 1,569 points, or 3%, to 53,356; the Nasdaq gained 364 points, or just over 1.4%, to 25,736; and the S&P 500 rose 119 points, or 1.6%, to 7,688. Investors treated the midterm results as negative for Elon Musk’s companies, sending Tesla down 3⅓% and SpaceX down 3.9%. CVS Health fell 12.5% after saying it plans to separate from Aetna, the insurer it joined in a roughly $70 billion merger nine years earlier. The 10-year Treasury yield declined to 4.88%.

In Brookwood, Alabama, University of Alabama student Thatcher Rotenberry and conservative resident Rachel Schaefer are opposing as many as three proposed data centers despite differing politically. Rotenberry cited possible heat, noise, air and water pollution near his former middle school; Schaefer fears runoff could damage the creek behind her home, where she watches a blue heron. Applied Digital’s Nick Phillips said its reported $3.2 billion project would use forested buffers, avoid utility-rate increases and truck any removed coolant off-site. Residents became suspicious after a residential rezoning and a nondisclosure agreement preceded disclosure of the project and a reported $314 million tax break. Mayor Joe Barger says only one project is actually planned and that officials will be transparent when appropriate; opponents say they now feel resigned.

Schools serve about 30 million lunches each weekday, but the federal maximum reimbursement is $4.85 per meal, which must cover food, milk, produce, whole grains, protein, staff, equipment and kitchen operations. The School Nutrition Association says 95% of nutrition leaders worry about financial sustainability. Austin food-service director Ryan Mikalizak said fruit and vegetable servings rose from roughly 25 cents to 40–50 cents, forcing cuts such as fewer staff and bananas served once instead of twice. Districts also face sodium and sugar limits, domestic-purchasing rules and pressure to cook from scratch despite older buildings having only warming kitchens. More than 5 million people have lost SNAP benefits since last year, reducing schools’ eligibility for universal free meals; some districts in Texas, Illinois and Kentucky have ended those programs.

ADP reported that private employers added 86,000 jobs in October, essentially unchanged from the previous month. Transportation, trade and utilities posted the largest gains, while professional and business services lost jobs. ADP also found that salaries continued to grow, particularly for people changing jobs, as the number of workers quitting increased. Marketplace flagged the figures as a preview of the official October jobs report due Friday.