Despite the ongoing uncertainty surrounding the US election, it has not prevented the US stock market from hitting new highs this year. BlackRock, the world's largest asset management company, recently warned that the market underestimated the risk of one of the US presidential candidates questioning next month's election results.
Jean Boivin, Managing Director of BlackRock Investment Institute (BII), a research division under BlackRock, believes that the controversial election results will lead to a "weeks long and highly chaotic legal battle" that could disrupt asset prices.
US treasury bond bonds have been sold off. This month, the yield of benchmark 10-year US treasury bond rose by more than 40 basis points, while US stocks are still close to historical highs.
Boyven said in a media interview that attempting to trade the US election event is "futile" and "the most noteworthy is the controversial election scene
I don't think this scenario has already been priced. If you want to prepare for a situation that requires a response, I think this is one of the situations that may be unfavorable to the market, "he said.
The possibility of a controversial election result is not out of reach, as multiple polls show that with less than two weeks until election day, Republican presidential candidate Trump and Democratic presidential candidate Harris are evenly matched.
As the competition between the two presidential candidates enters a white hot stage, voters and investors are increasingly likely to have to wait until after election day to know the election results, especially if the candidates choose to challenge the vote counting results in one of the key swing states.
In recent days, the gambling market has become increasingly inclined towards Trump's victory. The possibility of this outcome is increasing, which has pushed the US dollar index to a three-month high and is expected to achieve its best monthly performance since 2022. According to Standard Chartered Bank's calculations, about 60% of the recent increase in the US dollar can be attributed to the prospect of Trump's victory.
At the same time, the rise in the yield of the US treasury bond bond is partly driven by the high tariffs that Trump may impose when he returns to the White House, because this may exacerbate inflationary pressure.
Some other market strategists have recently expressed the same concerns as Bo Yiwen. Morgan Stanley stated that historically, delaying the announcement of election results would trigger short-term market volatility.
The Chicago Board Options Exchange Volatility Index (VIX), also known as the stock market fear index, surged 40% during the 2020 election controversy. A few days later, with the official announcement of the winner, the indicator finally stabilized.
Stifel's chief Washington policy strategist Brian Gardner pointed out another example, during the election dispute between George W. Bush and Gore in 2000, US stocks were sold off. From election day until December 13th, when the Supreme Court ended its legal challenge, the S&P 500 index fell by approximately 5%.