Presidential Elections Will Not Affect US Bonds but the Fed Decision

The US presidential elections will be the final word of 2020 in the world markets. It is also expected that the result of November 3 will affect the stock markets, according to the Global Strategist Outlook study prepared by the fund manager Natixis IM. However, it will not happen to US bonds. It does not matter who will occupy the White House for the next four years since the Federal Reserve holds power in fixed income. The Central Bank of the US is not going to change interest rates until 2028.

The coronavirus outbreak has caused a historic global crisis. The recovery is weak. And at such a difficult period, the financial markets are facing enormous challenges. Trade tensions between the US and China are growing. Besides, December 31 will mark Brexit, the United Kingdom’s definitive rupture with the European Union.

Another key event for investors and analysts will be the US presidential elections. The elections have already started in some regions of the country. On November 3, the presidential elections will uncover who is to occupy the Oval Office for the next four years: the current president, Republican Donald Trump, or Democrat Joe Biden.

Biden could reduce the uncertainty of US-China relations

Half of the analysts surveyed by the Natixis Global Asset Management believe that the US elections will cause social unrest. The more certain fact is that the polls’ result will affect Wall Street and the rest of the world stock markets. 

More than half of the experts consulted by the Asset management company believe that Trump’s re-election will benefit equities, given the expectations that he will reduce company taxes again. 

In Biden’s victory, the US is likely to maintain a hardline stance against Beijing. However, rhetoric would be softened, and some tariffs rolled back. Biden’s presidency could reduce the uncertainty of US-China relations with a more diplomatic approach. It could be beneficial from both an equity market and corporate spending outlook.

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