(Updates yields, adds analyst comments, changes dateline, previous CHICAGO/LONDON) CHICAGO, Nov 3 (Reuters) - U.S. Treasury yields marched higher and the yield curve steepened on Tuesday as the market awaited results from the national election. Americans headed to the polls to decide whether incumbent Republican President Donald Trump or his Democratic challenger Joe Biden will be elected president. The benchmark 10-year yield, which earlier rose to 0.898%, its highest level since June, was last up 3.8 basis points at 0.8857%. Yields on two-, three-, five- and seven-year notes also reached multi-month highs during the session. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, steepened to 72.40 basis points, its highest level since mid-March. The spread was last at 71.80 basis points, 3.1 basis points higher from Monday's close. Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, pointed to the potential for "a significant amount of volatility" in the market as some traders have positioned for Democrats to win the White House and control of Congress in the election. "In that scenario of a blue sweep, there is an expectation of a larger fiscal package and that would indicate additional supply as well as boost the prospects for reflationary pressures to reemerge," he said. Still, Merz noted the 10-year yield remained rangebound and that the U.S. Federal Reserve, which meets on Wednesday and Thursday, could discuss shifting its Treasury purchases to the long end of curve to prevent those yields from climbing too high. Tony Rodriguez, head of fixed income strategy at Nuveen, said the market was also watching for Wednesday's quarterly refunding details from the U.S. Treasury, which announced on Monday it expects to borrow $617 billion in the fourth quarter. "There's going to be a lot of supply the market's going to have to digest," he said. He added that factors involving the economy were also fueling uncertainty in the market with the October employment report due out on Friday and coronavirus cases on the rise. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last up 1 basis point at 0.1683%. Nov. 3, Tuesday 3:30 p.m. EST/2030 GMT Price US T BONDS DEC0 172-1/32 -0-23/32 10YR TNotes DEC0 138-20/256 -0-56/25 6 Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0963 0.000 Six-month bills 0.11 0.1116 0.000 Two-year note 99-234/256 0.1683 0.010 Three-year note 99-192/256 0.2102 0.013 Five-year note 99-74/256 0.394 0.019 Seven-year note 98-244/256 0.6535 0.028 10-year note 97-144/256 0.8857 0.038 20-year bond 94-192/256 1.4307 0.039 30-year bond 93-108/256 1.6557 0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.50 -0.25 spread U.S. 3-year dollar swap 7.50 -0.25 spread U.S. 5-year dollar swap 5.50 0.00 spread U.S. 10-year dollar swap 0.50 -0.25 spread U.S. 30-year dollar swap -35.50 0.75 spread (By Karen Pierog in Chicago, additional reporting by Dhara Ranasinghe in London; Editing by Bernadette Baum and Marguerita Choy)
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