Fading assumptions of a decisive presidential election win for Joe Biden have promoted relations and lifted the dollar as a set of trades based on a “blue wave” Democratic sweep of the White House and Congress staggered. Investors had predicted in recent days that decisive Democratic victories in line with pre-vote opinion polls would lead to another round of catalyst for the pandemic-harmed US economy.
Although Donald Trump’s victories in Florida and Ohio weaken investor prospect of a decisive election win for Mr. Biden. The Republicans’ strong displaying in various battleground states persuaded money managers to be ready for the chance that the outcome would remain unclear for days and the US could be left with a divided government.
“The baseline at this point is far more extended uncertainty,” said Ajay Rajadhyaksha, head of macro research at Barclays in New York. Scott Minerd, global chief investment officer at Guggenheim Partners, added that the US was likely to be heading for a disputed election result “no matter what happens” on election night.
The generation of the 10-year Treasury shortly overshadowed 0.9 percent on Tuesday evening, but then decreased as investors hurried into the debt. As the results are still unclear in many of the big swing states, the yield on the 10-year was down 0.08 percentage points in early Wednesday trading at 0.8 percent. Yields fall as a bond’s price rises. The dollar increased alongside the gains in Treasuries, rising 0.4 percent against the euro and 0.4 percent against the Japanese yen.
“Futures markets are pricing in a Trump win, which I think is a bit premature,” said David Bailin, chief investment officer at Citi Private Bank. “The market was looking at getting this behind us and getting our stimulus next year,” said David Giroux, chief investment officer for equity and multi-asset at T Rowe Price. “A contested election that we don’t know the answer to, that is pretty negative for the market.”
US equity markets have shifted dramatically in recent days. A rebound by the S&P 500 on Monday and Tuesday aided investors to recoup some of the losses they counted over the previous five trading days, which proved to be the worst week for the almost $40 trillion US equity market since the sell-off in March.
Source and Image Credits: Financial Times
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