Scott Thiel of BlackRock gave his analysis on the upcoming Presidential election on Bloomberg. He said,

“In this election we’re going to have potentially three points of volatility. The first is the election itself which concerns about the way the election is administered of mail-in ballots versus in-person voting. The second is the actual outcome so what actually happens and how close will it be and how clear will it be that one party has won or lost. The third is the transition of power once the election has been decided. Each of these three points could build on each other to create a very volatile period.

When we look at the markets, the virus and reinfection are an incredibly important part of market volatility going forward but when we look at a more contained and knowable event like the U.S. election, I think it could be a very big source of volatility going forward.

We’re reaching levels of deficits that are wartime like in many respects and the news around the U.S. deficit over the weekend reaching incredible levels. We have this policy revolution and a big part of the policy revolution is effectively the central banks of these countries and the governments working together to implement the policies. Longer term we are concerned about higher borrowing, higher deficits, higher and steeper yield curves, and more inflationary pressure that is associated with that. But I think in the near term you have this kind of one-two combo of a policy where you have coordination between the central bank and the government to keep yields where they are.

The central banks are going to be very keen on keeping financial conditions easy and keeping yields low or at least not volatile and so I do think that concerns around borrowing and around deficits are something investors have to pay attention to but not over the next few months.”

BlackRock Chief Fixed-Income Strategist Scott Thiel discusses the U.S. presidential election as a source of volatility and why high-yield bonds offer opportunity. He speaks on “Bloomberg Surveillance.”


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