While the rest of Wall Street rides something of a poll-and-news-cycle-based roller-coaster, settling into an uneasy calm today, bond traders have been pretty equanimous about things for a while. As they were before Brexit, bond market players are fairly certain that people aren’t going to go and do something really stupid today, like elect a guy who thinks bond payments are optional. But if they do, thanks to Brexit, they have a pretty good idea of what’s going to happen.
"The election event risk is asymmetric,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, a primary dealer. “Either a Trump victory will trigger a massive flight-to-quality move, or a Clinton win will result in a more modest bid for risk assets and status-quo expectations…."
"It will be a market event much like Brexit was," said Steven Ricchiuto, chief economist in New York at Mizuho. "Big money doesn’t want Donald. Big money wants Hillary Clinton."