While the headlines from the first US presidential debate focussed more on optics rather than policy, it pulled the election back to the forefront of investors’ minds. We explore how the shifting focus between the election and economic data will likely impact bond markets moving forwards.

What does this mean for fixed income investors?

We had our first taste of investors turning their focus to the market impact of the election after the presidential debate, but macroeconomic data is likely to return to the forefront of minds over the next few weeks. Investors are trying to navigate the drivers of market pricing between the data and political backdrop. Ultimately, the latter will move to the forefront as we continue to approach the election. Moving forwards, we believe that the front end of the US yield curve will be anchored around current levels, with 1-2 rate cuts priced in for the end of the year. It is the longer end of the curve that will be most affected by new policies and we feel that there is more term premium that needs to be priced in for this, thus we favour curve steepening positions for the US. 

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.



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