Early Election Jitters: Bidens Debate Performance Shifts Interest Rate Outlook

Investors are usually slow to react to potential election outcomes, but this year, they seem to be pricing in a possible Republican sweep in the upcoming election. This shift in sentiment, observed through rising interest rates on 10-year Treasury securities, follows the first presidential debate that took place on June 27th. The market`s reaction stems from the belief that a second Trump presidency, coupled with a Republican-controlled Congress, would lead to policies that could increase inflation, such as new import tariffs. This expectation contrasts with the current economic forecast, which suggests a potential decline in inflation and possible interest rate cuts by the Federal Reserve later this year.