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BofA Merrill Lynch Global Research – A Global Economics Rates & FX Report – Wednesday, 07 November 2012

President Obama wins the electoral college

 Rates impact: 10y rates biased 10-15bp lower, flatter curve

 FX impact: After volatility, USD buying returns under fiscal and growth risks

At the time of this writing, President Obama has won the electoral college (and therefore the Presidency), with Democrats retaining the Senate and Republicans maintaining control of the House. Although this outcome returns the status quo, we believe the outcome has important implications for the economy and the markets. Specifically we analyze three issues: 1) fiscal cliff and budget policy 2) change in Fed leadership and policy, and 3) housing policy.

 

 

Read the full report here.