FXStreet reports that Lisa Shalett from Morgan Stanley said that a key bond-market signal suggests how investors could cope with the volatility and uncertainty of this remarkable US election year.

“Generally, low long-term rates this close to an election typically point to a status quo result or divided government. However, the US stock market (along with polling data), seems to be telegraphing increasing odds of Democrats gaining control of the White House and both chambers of Congress, which would raise the odds of substantive policy reforms.”

“I expect the yield curve, an economic indicator based on the bond market, to steepen post-election, as long-term rates rise while short-term rates stay anchored by Federal Reserve policy. I believe that will happen regardless of who gets voted into office.”