TD discusses the coming US elections and believes that investors are now largely pricing in a Democrat sweep — the so called Blue Wave.
"We think this is reflected in the bear steepening in the Treasury curve, weaker USD and higher equities. This is also consistent with the polls and betting odds that show Biden's lead beyond the margin of error," TD notes.
"A Blue Wave can extend the recent bear steepening move in rates, reinforce the market's existing short USD bias, led by EMFX, and the focus on a large Green New Deal should be a tailwind for copper. A split government creates a tenuous relationship for risk given it could come with an expectation of less fiscal easing and likely longer uncertainty to get an outcome, bull flattening the curve," TD adds.