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 the possibility of a Republican sweep in the upcoming election. This shift in sentiment, likely triggered by Biden`s poor performance in the first debate, has led to a rise in interest rates on 10-year Treasury securities.

The reason for this increase is that, despite Trump`s preference for low rates, Wall Street believes his policies, particularly his stance on tariffs, would fuel inflation in the current economic climate. This, in turn, would make it difficult for the Federal Reserve to cut interest rates, which are currently being used to combat inflation.