US Elections: Blue Wave is off the table, US Treasury yields move lower – ABN Amro

FXStreet reports that the presidency result is likely delayed, but a blue wave is off the table while the Senate has probably failed to flip Democrat, economists at ABN Amro inform. 

“Incumbent president Trump is ahead of Joe Biden so far in the presidential election count in the key battleground states, but a much higher proportion of postal voting in this election due to the pandemic appears to be skewing the early count. These mail-in ballots are counted later in many states, and in some crucial states – particularly Pennsylvania and Michigan – it may take days before we have a final result.”

“Democrats needed to gain a net four seats to take control of the Senate, but so far they look to have gained just one seat, and two out of the three remaining close races currently favour Republicans. This means Republicans are highly likely to retain their narrow majority in the Senate.”

“We expect the trend of lower yields to continue going forward with the US curve bull flattening on the back of the theme of less fiscal stimulus, aggressive Fed purchases and the prospect that the fed funds rate will remain on hold for many years. A contested election outcome could add to this trend in the near term as well.”