Category: Fixed income

Fixed Income Outlook Q4 2020

Q4 Outlook: Introduction: Binary outcomes

The one event where markets have started to discount an outcome is the US presidential election. Rightly or wrongly, markets are contemplating a non-contested election, with Joe Biden potentially delivering a ‘Blue Sweep’ and gaining unified control of Washington.
Trees in forest

In our recent CIO Autumn Outlook, we highlighted the binary nature of the key event risks heading into the final quarter, all of which still have the scope to move markets significantly. These are the US presidential election, the question of further US fiscal policy support, vaccine developments and Brexit negotiations. Faced with such unpredictable events, we felt that any ‘buy the dip’ investor response was a much harder decision ahead of the US election in particular, and also more generally, without greater clarity on these other fundamental issues.

 

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