The result of the elections in the United States will be decisive for the markets. In addition to the impact it may have on listed companies, the fixed income market will be directly affected by the policies adopted in the world’s leading economy. The US bond will be the first to be affected by the presidential elections, and this has been proven by the movements that have occurred, in increases in yields, throughout the month of October, as the chances of Donald Trump winning the elections increased. Now, The large analysis houses highlight their projections and the impact that the electoral results will have on the US bondand the strategy repeats itself: if Trump wins, especially if he wins with a victory in Congress, sales of the debt security will continue. On the contrary, if Harris wins, it will be time to buy bonds.
From the current levels at which the US fixed income security with a maturity of 10 years moves, at 4.3% profitability, The direction taken by this asset, considered one of the main refuges in the market, will depend on who wins the elections. Trump’s program is more inflationary than Harris’s: both propose an increase in the country’s fiscal deficit, but the Republican candidate includes other inflationary measures in his program, such as the imposition of high tariffs and the tightening of immigration policy.
That is why the large analysis houses agree on the investment strategy in the bond with the elections as a backdrop: if Harris wins, it is time to return to the bond, but if Trump wins, there would still be upward pressure on yields. maturity of the security and, therefore, potential falls in its price.
Wells Fargo
The US bank considers that “the market is excessively confident in a victory for Trump and the Republicans in Congress”, and now they warn investors that, “in the event of a victory for Harris, we expect the US bond in yields to maturity of 4% in the 10-year title in one or two weeks. On the contrary, If the victory of Trump and the Republicans in Congress really occurs, “we see yields rising between 10 and 15 basis points.”
Societe Generale
In a similar vein to Wells Fargo, the French bank warns that, while the election results “will be critical” for the bond, “a point has been reached where investors can consider investing in a reversal of recent movements.” “, that is, buy at current levels. Of course, just like the US bank, Société warns that “a victory for Harris is an opportunity to buy bonds, while a victory for Trump, and a Republican victory in Congress, could result in a new increase in the yields of the bonds”.
JP Morgan
The US bank is clear that the movements that have occurred in the country’s debt market in recent weeks have to do with the improvement of Trump’s electoral expectations, but they believe that the wave of sales will continue if Trump finally wins and the Republicans win Congress. “In this case, returns could climb to 4.6%”warn the bank’s strategists. Of course, sales have taken the title to a level where “there is room for drops in returns if there is a divided Congress, and especially if Harris ends up winning the elections.”
TD Securities
From the Canadian investment bank they warn that “a victory for Harris will boost fixed income purchases, as investors reduce their expectations of seeing more inflation and a larger deficit.”
Barclays
The British bank’s analysts recall that “a Republican sweep [una victoria en las cámaras de representantes] It will be negative for bond prices, since it is a possibility that the markets have not fully discounted. However, a Harris victory, combined with a divided government, will generate drops in profitability across the entire US debt interest curve,” they warn.
Goldman Sachs
“A victory for Harris, with a divided government, will generate an entry of purchases in the bond, and a drop in volatility,” they explain from the US bank. On the contrary, “a Republican sweep should increase yields, steepen the interest curve [ventas más agresivas en los vencimientos más largos del espectro de deuda estadounidense]and increase volatility,” they recall.
BMO Capital Markets
For the investment bank of the Montreal bank, it is clear that “the current configuration of financial markets maintains the balance of risks in favor of adding duration [comprar los plazos de la deuda más largos] in case there is an increase in returns after the elections”, but they are also clear that it will be necessary to “chase fixed income rally in case Harris wins”.
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