Bonds and the Election

A little over 25 years ago when I started a job as a research analyst for a financial newsletter publication, one of my first tasks was to answer incoming calls from subscribers.

One of my managers at the time asked me to take note of any common questions or concerns. That’s when I first heard the old adage that for every reader who called in with a question, there were 100 more wondering the same thing who didn’t have the inclination to call and ask.

I have no idea if that proportion is accurate, but the sentiment rings true.

Unless you’ve been stranded on a desert island for the past few months, you’re probably well aware the US presidential election is now less than a week away. And, as in every other election cycle I can recall, there’s a deluge of stories peddled in the financial media aimed at ways to profit from the upcoming election including stocks or exchange-traded funds (ETFs) to buy or sell depending on the outcome.

I’ve received a ton of questions regarding the election impact on Treasury yields and the bond market.

I suspect at least some of those questions have been motivated by a “Trump Trade” narrative in bonds that’s been making the rounds lately both online, and even in some research I read that’s generally aimed at an institutional or Wall Street audience.

Specifically, the prevailing narrative has been that the recent rise in bond yields — and corresponding sell-off in Treasuries and Treasury ETFs like the iShares 20+ Year Treasury ETF (NYSE: TLT) — has been driven by rising probability that Donald Trump wins a second term as President next Tuesday.

I created this short video presentation — less than 7 minutes in length — to address these questions, and the prevailing “Trump Trade” narrative out there using actual data, charts and statistics.

DISCLAIMER: This article is not investment advice and represents the opinions of its author, Elliott Gue. Smart Bonds is NOT a securities broker/dealer or an investment advisor. You are responsible for your own investment decisions. All information contained in our newsletters and posts should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence and consider obtaining professional advice before making any investment decision.