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MNI MARKETS ANALYSIS - Election Outcomes and Market Response

MNI Markets team picks through the likely market responses to various election outcomes & combines MNI's Political Risk team's Election Scenario Matrix with percentage chances of each outcome.

A 'Blue Wave' is broadly seen as a bearish result for US rates, due to expectations that it would lead to a large fiscal stimulus package early in 2021. Some on the sell-side, though, see the status quo as also being bearish for rates, with Republicans/Trump willing to pass stimulus in the near future in conjunction with House Democrats if reelected.

An inconclusive election result that dragged out could potentially be the worst-case scenario in terms of market sentiment, and could force the Fed to intervene. This is especially the case as it would be seen as likely to delay the fiscal stimulus that FOMC members have assumed is coming at some

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MNIElectionMarketScenarios.pdf

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