Market Quote: The U.S. Election Looms
Author: The editor's desk
October 31, 2024
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
And the Winner is…
We anticipate an unclear election result could very likely lead to heightened volatility in U.S. equity markets, especially if it drags on for more than a few days and is contentious. At the same time, if that happens, the U.S. bond market may rally because it will be viewed as a defensive asset class in this scenario. Either way, it’s difficult for investors to position their portfolios based on government policies that may be enacted until there a definitive winner is announced.
Church and State
There has been a lot of chatter regarding the independence of the U.S. Federal Reserve heading into the election next week, but let’s hope the winner – whoever that might be – doesn’t end up trying to interfere with the U.S. central bank’s policy decisions in the future. I don’t believe that would be in the best interest of investors.
Fiscally Unsound?
The U.S. Federal Reserve may react to a contested election by easing a bit more than it would otherwise, which could mean U.S. Treasury yields move a bit lower in the near term. The U.S. deficit, meanwhile, can be expected to climb higher in the coming months – regardless of who ends up winning the presidency – and that may not be so good for U.S. bond investors because it would likely result in more issuance of U.S. Treasuries.
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The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
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