FTDS - Easing Into Elections

2024-07-17 07:00:00 ET

Summary

• The reordering of US election outcomes led to a bear steepening in US treasuries.
• The global easing cycle kicked off with the European Central Bank, Bank of Canada, Riksbank, and Swiss National Bank all beginning interest rate cuts.
• Financial markets this year are like ducks on the water - all the action is beneath the surface.
• Global elections and resulting fiscal policy uncertainty have the potential to influence government debt pricing and push term premia higher, reducing the attractiveness of longer maturity exposures.

Elections have been anything but easy for investors - from the repricing of fiscal policy expectations following the French, Mexican, and Indian elections to the bear steepening in US treasuries. These dynamics could impact the pricing of government debt and contribute to rising term premia, potentially undermining the attractiveness of longer maturity bonds....

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