Traders Increasingly Focused On US Election As Trump Odds Soar

Rates traders are starting to price in US election risks to Treasury and volatility markets, according to Goldman strategists. The VIX remains high, indicating market uncertainty about the election outcome. Wall Street's rates traders and strategists are assessing the election's impact on the market, with some recommending shorting 10-year TSYs versus German bunds. Bank of America maintains a dip-buying stance and real steepeners bias, while Barclays keeps its view to pay 5y5y USD versus EUR rates. BMO Capital Markets looks to enter long 10-year breakevens if they fall below 223bp, and Citi takes profit on a long breakeven position. Goldman Sachs maintains its recommendation to be short 10-year Treasuries versus bunds, citing election-related risks. TD Securities re-enters 5s30s steepeners due to easing inflation and jobs momentum. Equity traders are also assessing the election, with Goldman's Republican Victory basket surging to new highs and the Democrat Victory basket sinking. Online betting markets show Trump's odds increasing, and Wall Street traders are positioning themselves ahead of the election.