Jim Cielinski, Global Head of Fixed Income, believes central bank policy is likely to be the dominant influence on fixed income markets, regardless of who wins the US election.

  Key takeaways

  • President Donald Trump and Democratic nominee Joe Biden have divergent economic policies. But the specific impact of these policies – what actually gets implemented – will not be known until long after election night, a caution against making immediate shifts in a fixed income portfolio.
  • Markets are expecting volatility to be high around the election but subdued in most other periods as a result of the US Federal Reserve’s commitment to low interest rates. Thus, following the election, we expect the search for income to continue in bond markets.
  • Against this backdrop, mortgages, asset-backed securities, collateralised loan obligations and corporate credit could remain attractive, almost irrespective of the election outcome.



Collateralised loan obligation: This is a structured finance product in which loans from different businesses are pooled together and sold to different classes of investors in various tranches. The different tranches carry different yields, with investors receiving higher yields in exchange for being earlier in line for absorbing any losses should the underlying businesses behind the loans fail to meet their repayments.
Green or clean energy: Energy production or energy consumption that is focused on sustainability, for example energy from non-fossil fuel, renewable sources.
Inflation: The rate at which the prices of goods and services are rising in an economy. The opposite of deflation
Volatility: The rate and extent at which the price of a portfolio, security or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment
Yield: The level of income on a security, typically expressed as a percentage rate. For a bond, at its most simple, this is calculated as the coupon payment divided by the current bond price.