Prepare for Volatility and Shift Away from Cash in Upcoming Election Season

  • Investors should prepare for increased volatility during the U.S. presidential election
  • Cash has historically underperformed in comparison to fixed income and stocks around elections
  • Nuveen’s global investment committee suggests moving out of cash during this period

Investors should brace themselves for heightened market volatility during the upcoming U.S. presidential election, according to investment manager Nuveen. The company’s global investment committee suggests that investors use this period as an opportunity to move out of cash. An analysis of past seven U.S. election cycles revealed that cash, defined as one-to-three-month Treasury bills, significantly lagged behind the average return of various fixed income sectors and stocks in the six months preceding and following elections. The U.S. Federal Reserve recently decided to lower its benchmark interest rate, with Fed Chair Jerome Powell citing a significant decline in U.S. inflation as the central bank adjusts its monetary policy to maintain a strong labor market. The S&P 500 has gained almost 20% this year, while the broad U.S. bond market has also seen growth. However, yields on three-month Treasury bills may be vulnerable to further cuts if the Fed continues with rate reductions as expected.

Factuality Level: 7
Factuality Justification: The article provides relevant information about the potential impact of the U.S. presidential election on market volatility and cites a study by Nuveen investment manager. It also discusses the Fed’s decision to lower interest rates and the performance of various financial instruments. However, it includes some minor speculation and repetitive information.
Noise Level: 4
Noise Justification: The article provides relevant information about the potential impact of the U.S. presidential election on market volatility and historical trends in investing during election cycles. It also mentions recent economic data and the Federal Reserve’s actions. However, it could benefit from more in-depth analysis and evidence to support its claims.
Public Companies: Nuveen (), ADP (), S&P 500 (SPX), Dow Jones Industrial Average (DJIA), Nasdaq Composite (COMP), iShares Core U.S. Aggregate Bond ETF (AGG), 3-month Treasury bills (BX:TMUBMUSD03M)
Key People: Jerome Powell (Fed Chair)

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Financial Relevance: Yes
Financial Markets Impacted: Yes
Financial Rating Justification: The article discusses market volatility around the U.S. presidential election, the Federal Reserve’s decision to lower interest rates, and the performance of various financial instruments such as stocks and bonds. It also mentions the impact on fixed income investments and job growth in the U.S. These factors all pertain to financial topics and have an effect on financial markets and companies.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article and it mainly discusses market volatility around the U.S. presidential election and its potential impact on investments.
Move Size: No market move size mentioned.
Sector: All
Direction: Down
Magnitude: Small
Affected Instruments: Stocks, Bonds

Reported publicly: www.marketwatch.com