Election Insights: How Bond Markets May React

How will the 2020 U.S. presidential election impact bond markets? Portfolio Manager John Lloyd anticipates more risk should a left-leaning candidate win the Democratic nomination, with increased volatility possible in sectors such as banking, health care, energy and technology.

Key Takeaways

  • Bond markets have not had a strong reaction to election risk so far this year, given that a more moderate candidate (former Vice President Joe Biden) is currently a frontrunner in polls.
  • Should a more left-leaning candidate win the Democratic nomination, we would expect to see increased volatility in certain sectors.
  • With Elizabeth Warren and Bernie Sanders both running on a Medicare-for-All platform, health care could face significant ramifications while the banking, energy and technology sectors could also be impacted by some of Warren’s proposed regulations.