Could This Election Be The Tipping Point To Genuine MMT?

Could This Election Be The Tipping Point To Genuine MMT?

Tyler Durden

Tue, 11/03/2020 – 13:50

In his “chart of the day”, DB credit strategist Jim Reid shows the three-day intraday move of 10-year treasuries and the US dollar between election day and the day after the results came through in Nov 2016.

He notes that between polls closing and 13:00 the day following the election, 10-year US treasuries sold off nearly 40bps as the market fear over a Trump victory turned exceptionally quickly to one of reflation. However, 10 days after the election they were +64bps higher than the intra-day Asian market lows on election night.

As Reid then writes, that we haven’t actually got inflation is an interesting postscript but then asks “could this election be the tipping point to genuine MMT?”

The point of the graph, as he strategist explains, is to indicate that very big moves can happen around such events. Back in 2016, during the Asian session following the elections S&P futures fell -5% overnight in the initial response to Trump’s victory, causing circuit breakers to pause trading, before sharply rallying to finish the day +6.1% higher than these lows.

Will we get a similar kneejerk reaction, followed by an even more dramatic reversal this time in either stocks or bonds? We’ll know – hopefully – in a few hours.

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Author: Tyler Durden