Obama re-election: the bond manager’s view

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Top performing global bond manager David Leduc is set to take profits off the back of a post election bond boost.

The Citywire AAA rated manager said risk assets look to fall as US voters on Tuesday re-elected President Barack Obama with Congress remaining split.

Whilst Democrats hold the US Senate, Republicans won a sufficient majority to take control of the House of Representatives.

‘We would be inclined to sell any strong market moves here dependant on the market reaction,’ the BNY Mellon Euroland Bond C EURBNY Mellon Euroland Bond fund told Citywire Global immediately after the election results came in.  

He added: ‘We believe that this is a mild negative for risk assets and the US dollar and positive for bonds. However, we do not see this changing much given that US fiscal cliff resolution remains an open question. As such, we do not expect to change our current strategy based on these results.’

Whilst risk-off assets are considered to be boosted by a Democrat president, both parties have been seen fighting over taxes and spending cuts needed to manage the US deficit.

Markets will now be focused on how the returning government handles the lingering impasse concerning the expiration of Bush-era tax cuts and automatic spending cuts at the end of this year.

Gold prices had fallen in the run up to the US election due to a possible Republican win, John Hathaway, manager of Tocqueville’s flagship gold fund, said earlier this week.

Citywire Global, will be keeping ahead of US election reaction from Berlin today.