In light of the market rally occurring along with election uncertainty today, senior editor, Ash Bennington, and managing editor, Ed Harrison, together pose…
Starting in March, a series of emergency measures were rolled out that temporarily eliminated or blunted restrictions on bank balance sheets, along with ramped up support for financial markets that in the US at least, was unprecedented.
...a lot of this sticky vol from over-hedging “crash” event risk could then mechanically “slingshot” Equities higher into the year end, particularly as tail-risk passes and hedges are then unwound
...the reality is we’ll almost certainly get stimulus no matter who wins. This economy is built on stimulus. The powers that be will ensure the stimulus spigot stays open.
This suggests at two things: i) McConnell will concede to Democratic demands suggesting he won't back Trump in forcefully challenging the election outcome and ii) rumors of the reflation trade's death may have been greatly exaggerated.
The risks are "skewed towards a deterioration in COVID outcomes, an absence of fiscal support, persistent institutional uncertainty and broader negative growth surprises in the US in coming weeks."
The Treasury will raise its long-term refunding debt sales next week to a fresh record $122 billion, to refund approximately $60.9 billion of Treasury notes maturing on November 15, 2020.
"The uncertainties associated with a disputed election were what investors feared the most. Blue-Wave scenarios are now off the table and the probability of gridlock has risen."
The first shock on Election Day didn’t come from the U.S. Rather, it was the news that China suspended Ant Group’s $35 billion initial public offering.
