With polls showing Republicans will win at least one house of Congress, Tuesday’s election provides a potential catalyst for falling bond yields and rising stock prices, supporting the continuation of the bear market. Morgan Stanley strategist Michael Wilson said in a note Monday.
The elections will determine the control of both houses of Congress and the governors of the 36 states.
This week, however, volatility is expected in the market for two reasons – the election results may not be clear for a few days and the October consumer price index could generate some noise.
According to Morgan Stanley strategist Michael Zezas, if Republicans gain control of both the House and Senate, the likelihood of a continuation of the stock rally increases as the GOP is talking about freezing spending through the debt ceiling. .
“Bottom line, we remain tactically bullish on US equities given recent risk events for bonds (November Fed meeting, October labor and inflation data) passed and left the range of exchange rate volatility further down from historic highs,” wrote Wilson.
Before that, S&P, Dow and Nasdaq futures rose pre-midterm and inflation data set for later this week
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