Treasuries plunged, with 30-year bond yields climbing the most since at least 1977, amid concern that a Donald Trump administration and a Republican-led U.S. Congress will unleash a wave of spending to boost the U.S. economy, triggering a surge in inflation.

Adjusted for current yield levels, which are close to historical lows, the magnitude of the day's rise hasn't been exceeded in data compiled by Bloomberg going back to February 1977. Benchmark U.S. 10-year yields rose above 2 percent for the first time since January as a bond-market measure of inflation expectations climbed to the highest since July 2015. A gauge of the yield curve steepened as longer-dated debt underperformed.

The plunge marked a turnaround from earlier in the day when U.S. debt led a global rally in government bonds during Asian trading hours as it became clear Trump had pulled off an electoral upset. The initial safe-haven bid gave way to expectations that Trump, who pledged during his campaign to cut taxes and outlay as much as $500 billion on infrastructure, would embrace policies that could widen the budget deficit and accelerate the pace of price gains.

“This is one day's reaction to the biggest political surprise we've had in living memory in this country,” said Brian Nick, chief investment strategist at TIAA Investment Management. “The market's being driven by a pickup in inflation expectations—from quite low levels—on speculation that fiscal policy next year will be more expansionary.''

Treasury 10-year yields climbed 20 basis points, or 0.2 percentage point, to 2.06 percent as of 5 p.m. in New York, according to Bloomberg Bond Trader data. The 1.5 percent security due August 2026 fell 1-3/4, or $17.50 per $1,000 face amount, to 95-3/32.

U.S. 30-year yields rose 23 basis points to 2.85 percent.

The spread between yields on two- and 30-year debt increased 19 basis points, to 195 basis points, the widest closing level since Feb. 4.

Longer-term securities were also weighed down by fresh supply. A gauge of demand fell to the lowest since 2009 at a $23 billion auction of Treasury 10-year notes on Wednesday, before a $15 billion offering of 30-year securities Thursday.

The 10-year break-even rate, a bond-market gauge of inflation expectations over the next decade, rose to 1.85 percentage points.

While traders saw a win by Democrat Hillary Clinton as offering a degree of continuity, Trump, who trailed for almost the entire race, is less of a known quantity. The real-estate magnate has pledged to tear up trade accords and has said a strong dollar undermines U.S. competitiveness.

The former reality TV star has criticized officials from Fed Chair Janet Yellen to congressional leaders. The market-implied chances of a rate hike in December dropped as Trump's victories piled up, before recovering later.

“We're seeing the market scramble; we're seeing fear of a trade war seeping into Treasury prices,” said Robert Tipp, chief investment strategist in Newark, New Jersey, for the fixed-income division of Prudential Financial Inc., which oversees more than $1 trillion. “Markets do not like uncertainties. If markets are fearful, the Fed's December hike may get pushed to the sideline.”

After plunging below 50 percent at one stage, the prospect of a December rate increase climbed back to 86 percent, based on U.S. overnight indexed swaps that trade 24 hours a day. That is in line with the market-implied odds earlier this week. The OIS-derived probability tends to be a few percentage points lower than calculations based on fed funds futures.

Sovereign bonds fluctuated in recent days, along with the polls. They tumbled Monday and Tuesday as Clinton's chances of victory increased after the FBI said her handling of e-mails wasn't a crime. Most strategists in a Bloomberg survey said yields would fall Wednesday if Trump won and remain steady or rise on a Clinton victory.

Still, today's moves reflect how a December increase is no longer a foregone conclusion, according to Jim Vogel, head of interest-rate strategy at FTN Financial in Memphis, Tennessee.

“I think there would be few at the Fed who would hesitate to hold off if they felt a rate hike was somehow disruptive during volatility,” Vogel said. “They could easily postpone until the first meeting in 2017 without any risk to the economy getting out of control.”

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Treasuries Plunge Most in Four Decades

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