Midterms won't calm bond market turmoil — SkimNews
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- U.S. 10-year Treasury yields touched a 24-year high of 5.36% in early October, driven by inflation fears from higher energy prices and heavy government and corporate bond issuance.
- Canadian 10-year bond yields exceeded 4% for the first time in nearly three years, mirroring a global bond selloff linked to U.S. fiscal and inflation concerns.
- Lorne Gavsie of CI Global Asset Management said the midterms should be viewed as "noise" and do not justify major asset allocation changes given macro uncertainty.
- Ethan Currie at National Bank noted that safe-haven demand for bonds has returned due to investor skepticism about AI and tech stocks, influencing near-term fixed income flows.
- Thomas Ryan of Capital Economics warned that Democratic control could revive debt-ceiling brinksmanship, raising default risks despite potential checks on Fed nominations.
- David Berman advised investors to remain passive through the midterms, emphasizing that presidential control over foreign and trade policy will sustain Iran-related market risks.
Why it matters: Investors face persistent bond market volatility regardless of election outcomes because presidential authority over Iran policy and fiscal dynamics—like debt ceiling fights and deficit spending—will continue to drive inflation and risk-off behavior, with U.S. 10-year yields still near 5% and Canadian yields above 3.75%.
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