Early Election Jitters: Bidens Debate Performance Sends Ripples Through Financial Markets

Investors are usually slow to react to potential election outcomes, but this year is different. Following the first presidential debate, interest rates on 10-year Treasury securities rose. This shift is attributed to investors reacting to the possibility of a Republican sweep in the upcoming election, with Trump as president and a Republican-controlled Congress.

This potential outcome worries investors because Trump`s policies, such as import tariffs, could increase inflation. While Trump favors low interest rates, his policies might force the Federal Reserve to raise rates to combat inflation, which is contrary to the current expectation of potential rate cuts later this year.