Beware the Midterm ‘Tail Risk’ to the U.S. Yield Curve
- Democratic sweep may spur flattening on tax-hike bets: MUFG
- GOP strengthening control of Congress could fuel steepening
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John Herrmann has a message for bond traders ahead of the Nov. 6 U.S. midterm elections: Beware the wave.
Most prognostications have a split Congress after next month’s vote. But Herrmann, a rates strategist at MUFG Securities Americas Inc., argues that a decisive result -- for either party -- has a higher probability than most forecast, and that such an outcome poses a sizable “tail risk” for the yield curve.