Traders are ready for potential asset sweep assets

Photographer: Jim Watson / AFP via Getty Image

Even a new $ 1.8 trillion push with the White House Incentive plan, it is unclear whether anything will be done before the presidential election. The Senate is opposed to a huge program, and Majority Leader Mitch McConnell said his priority is the Supreme Court nomination, not fiscal aid.

Despite the uncertain times, investors are betting that more excitement will eventually ensue. Ultimately, moving the economy forward is going to be a priority for whoever wins the election in November. 3. Also, widen his leadership with Democrat Joe Biden In President Donald Trump’s elections, investors from asset classes are beginning preparations for a possible Democratic sweep, which could focus on large government spending, less controversial trade policy and infrastructure and clean energy in early 2021.

  • Yield Curve: The difference between the five-year and three-year bond yields increased to 11bps in the last two weeks. ICE BofA’s Move Index of Treasury Volatility Index has been removed from the rock bottom. Both reflect expectations that more spending under a Biden administration and Democratic Congress is likely to boost inflation, increase debt issuances, and extend the deadline by the Federal Reserve to raise interest rates.
Bond volatility
  • Stocks: The outflow of renewable energy shares may reflect expectations of a change in policy under a Biden presidency towards cleaner energy. VIX volatility futures fell this week, prompting investors to expect a less controversial election
Biden and Renewable Energy
  • Currencies- More fiscal expenditure would widen America’s trade and budget deficit, as the dollar fell across the board. The Bloomberg JP Morgan Asia Dollar Index jumped the most since April 2019, led by the Chinese Yuan with an upside. Biden is seen as less likely to confront Trump than Trump on trade
  • Credit-lowest-quality CCC-rated stocks show declines, risk declines and stimulus expectations
Lower-rated junk bonds outperform