The recent debate has worsened speculations in the markets about Biden’s capacity to serve another term
The recent debate between US President Joe Biden and Donald Trump has led to Wall Street seeing the recalibration of portfolios, as reported in an article by BNN Bloomberg.
The article recounted how the debate had raised concerns regarding Biden’s capacity to serve another term, causing many traders to shift money to and from the US dollar, Treasuries, and other assets which would be affected should Trump makes his return to the office. In the following days after the debate, the bond market saw the trading action more are the yields on benchmark 10-year Treasuries rose to up to 20 basis points.
Speculations regarding the possibility of Biden dropping from the presidential race led to investors making contingency plans should it occur as betting markets saw that there was a less than 50% chance of him remaining as a candidate for presidency.
Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York, stated that the markets have been repricing election odds following the debate.
“The news over the past 24 hours has really only added fuel to the fire,” he said further.
According to JPMorgan Chase & CO. strategists which were led by Joyce Change, should Trump become president, there would be a raise in the prospect of higher inflation as well as a strong dollar because of his promise of having more tariffs as well as a tougher immigration stance.
Some Wall Strategists have also stated that clients may need to prepare for sticky inflation as well as higher long-maturity yields in the wake of a term with Trump in the office. The article further pointed out that the possibility of Trump winning the election also supported myriad stocks which would benefit from his stances when it comes to the regulatory environment, mergers, and trade relations.
“For much of the year, options signals consistently indicated a Biden victory. In the wake of what was widely considered a sub-par performance by President Biden in last week’s debate, however, options markets now signal roughly even odds between the two candidates,” said Chief Investment Strategist Myron Scholes from Janus Henderson.
