According to analysts at TD Securities, political risk is notoriously difficult for markets to predict in part due to the increasing unreliability of polls to determine election outcomes, as was the case in the 2016 US Presidential election.
Key Quotes
“There is also uncertainty about the policy outcome even if the results of the election are known.”
“Historically elections have not had a significant market impact (especially when excluding the crisis period). However, we wouldn’t be surprised by a larger reaction this time around given how much of the equity and rate move was driven by the Trump tax cuts in late-2017.”
“We don’t expect much from the lame duck Congress in any scenario.”
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