Analysis-Bond market re-focus on US elections throws wrench into 2024 rally hopes

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A recalibration of how the U.S. presidential election plays out is causing bond investors to bet yields stay higher for longer as November approaches...

NEW YORK - A recalibration of how the U.S. presidential election plays out is causing bond investors to bet yields stay higher for longer as November approaches.

"We feel the probability of Trump election victory has risen," John Velis, Americas macro strategist at BNY, wrote in a note. "Our faith in lower yields going forward has been eroded and we wouldn't be surprised to see a continuation of the very recent moves higher in yields.

"I think there was some frustration with some people who took that big positioning," especially on behalf of clients, said Kevin McCullough, portfolio consultant at Natixis Investment Managers. "That's a real hard conversation to have." "We still have six months left to carry in fixed income ... and obviously if yields move lower from here still, there's potential for even more appreciation," said Mike Cudzil, managing director and generalist portfolio manager at PIMCO, one of the world's biggest bond investors.

 

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