U.S. yields are down (12 bps as of 2:00 p.m. ET) following Barack Obama’s presidential victory.
In part, the market seems to expect a slightly slower recovery and more stimulus in an Obama-controlled White House.
“Monetary policy will remain loose under Obama,” Mizuho currency expert, Michiyoshi Kato, told Bloomberg.
The market consensus now seems to be that yields will flatline or fall until year-end, given Obama’s second-term presidency. (Bond yields dictate fixed mortgage rates, most of the time)
However, there’s one dark and lingering cloud, that being the impending budget crisis (a.k.a. fiscal cliff). With no resolution in sight, investors will only take so much risk—preferring to park money in relatively safe U.S. Treasuries and keeping yields low in the process.
The wildcard will come closer to year-end or in early 2013. That’s when investors must decide if the U.S. will solve its fiscal deadlock or face a second debt downgrade, loss of investor confidence and/or stimulus-triggered inflation, any of which could potentially push up U.S. yields.
In the meantime, barring the unexpected and until sufficient U.S. growth seems likely, Canada’s key lending rate (and prime rate) probably won’t stray much above present levels.
Rob McLister, CMT
Democrats win the Senate + Republicans have majority in the House of Representatives = Obama unable to affect substantive change.
Most importantly, Bernanke stays.
We dodged a bullet.
Obama will make the compromises required to move US forward.
Rich people will cry possibly, but that’s OK as they can afford the napkins required.
Yeapiiee. It was expected
Rich will cry, but as you have correctly pointed, they could still afford the napkins. Poor (Obama’s voters) will get poorer.
America needs to turn back to capitalism not socialism, since only businesses can drive job growth – not government which prints money like there is no tomorrow!
Exactly. It’s about jobs, taxes and inflation and Obama’s re-election is bad for all three.
We all saw how the capitalism worked there so far. It was on it’s top in 2008, if you remember.
the market adjustment would have happened anyway yesterday. It more a reaction to the incertanty regarding the pending tax rules that come due soon. It had very little to do with the election.
America needs a little more socialism, and a little less capitalism. Unrestricted, unregulated capitalism and Wall St. greed is what killed the U.S economy, and affected the entire world!! Wall St. needs to be restrained by Main St. They should look to Canada as a great capitalism/socialism model. There’s a reason we led the G7, and the U.S was an absolute disaster the past few years!! Why would anybody want to go back to the Bush economy??
I disagree. You would have seen a whole different tone in the bond market if Romney had won.
No. America doesn’t need more job killing socialism. 15% real unemployment doesn’t help anyone including Canada.
http://www.forbes.com/sites/peterferrara/2012/10/11/obamas-real-unemployment-rate-is-14-7-and-a-recessions-on-the-way/
With Obama getting a second term, you won’t see the prime rate change anytime soon. The USA could head back into another recession if the stimulus money ends and taxes go back up. Also, The Canadian real estate market is heading downward with all the belt tightening of mortgage rules. This is very good news for current variable rate holders.
so : Fake money, fake hopes and harder fall after, that would have happened if Romney did win. During the process himself and his friends would have become richer though.
Gladly, he lost :)
People deserve low rates. Banks still make their huge profits anyway
“MONTREAL — Bank of Canada governor Mark Carney says there is evidence that reforms being imposed on the world’s largest banks — often against their will — are contributing to economic growth and job creation, rather than the opposite as critics claim.
Read more: http://www.montrealgazette.com/business/Bank+reforms+proving+benefit+growth+creation+says+Carney/7520517/story.html#ixzz2BiOPDdb1“
Well, the government just announced that economic growth is slowing… so much for what Mark Carney says..
In the victory and defeat speeches, all the politicians utter the words, “people have spoken” Romney’s policy stated that the rich should not be asked to pay a little more taxes and Obama clearly stated that he prefer to tax the rich a little bit more. Therefore, if “people have spoken” and with majority voting for Obama, I fail to understand why Obama needs the “House” to approve the bill.
People have given the president that right at the ballot! The GOP leadership should have their representatives vote for the President’s request because “The People Have Spoken” To save their faces, GOP have good excuse to approve the bill and save the whole world from the missery.