Bond Traders Start to Bet on a Democratic Sweep
The big jump in 30-year U.S. Treasury yields suggests investors are thinking about the policy implications of much more fiscal stimulus.
Blue wave.
Photographer: Olivier Douliery/AFP/Getty Images
I was on vacation over the past two weeks, a trip that began with news of Ruth Bader Ginsburg’s death and ended with President Donald Trump’s hospitalization after testing positive for Covid-19. It was strange, to be sure, though I watched from afar as markets took these momentous political events in stride: The S&P 500 Index moved less than 1% from Sept. 18 through Oct. 2, the benchmark 10-year Treasury yield rose by less than a basis point and investment-grade credit spreads barely budged.
In general, politics is usually little more than a sideshow for financial markets and bond traders especially. However, with less than a month until U.S. elections, there are some signs that the typical relationship is changing. In particular, the nationwide horse race seems to have finally caught the attention of the world’s biggest debt market.