JPMorgan Says Key Markets Pricing-in Contested Election Risk
- Currencies may be best place to hedge results, Younger says
- ‘Surprising’ a delay isn’t factored into FX prices: strategist
Key U.S. markets now appear to be pricing in the risk of a delayed or inconclusive result from the upcoming presidential election, according to fresh analysis from JPMorgan Chase & Co.
Pricing for volatility protection in interest rates -- where investors trade and hedge bond exposure through various derivatives -- is “very high relative to the same stage in previous cycles,” strategists led by Joshua Younger said in a note published on Tuesday. Both over-the-counter derivatives and options on U.S. Treasury futures show volatility priced at about six times its normal level, compared with a rate of two times normal in the 2008 and 2012 presidential elections and three times in 2016, when Donald Trump surprised pollsters by defeating Hillary Clinton.