Tiffany Wilding

Despite heightened political noise surrounding the Federal Reserve, we do not anticipate dramatic shifts in monetary policy – regardless of who is confirmed as the next chair. A Trump-appointed candidate would likely favor a faster return to a neutral policy stance than the current median view of the Federal Open Market Committee (FOMC). They may also support a more aggressive approach to balance sheet normalisation, with an emphasis on gradually shifting the Fed’s holdings toward Treasury bills.

While Trump’s nominees for Fed chair would likely advocate for a faster pace of rate cuts, the administration’s optimistic growth forecasts limit the case for a policy stance below neutral or for adopting a much lower estimate of the neutral rate than the current FOMC consensus.

Furthermore, despite ongoing speculation, we believe it is highly unlikely that Trump will fire Fed Chair Jerome Powell before his term ends in May 2026. Firing Powell could be self-defeating in several respects, and besides, the legal, political, and economic ramifications loom too large. (For a more detailed analysis, see the article by my colleague and former Fed Vice Chair Richard Clarida in last month’s Economist, titled “The best check on Fed politicisation is fear of being judged a failure.”)

Overall, we believe a reasonable path forward given our economic outlook is a return to a neutral policy stance by the end of 2026, with interest rates settling near the midpoint of the Fed’s estimated neutral range of 2.6%–3.6% (down from the current level of 4.25%–4.5%). This is lower than the FOMC’s current 2026 Summary of Economic Projections median projection of 3.6%, but it remains within the central tendency range. So far, consumer price adjustments resulting from higher tariffs have been mild. If that trend continues, there is a strong case for the Powell-led FOMC to resume normalizing rates later this year.

Interest rates could reach neutral next year

Many investors are asking about the direction of Fed policy, particularly in light of Trump’s public dissatisfaction with recent decisions under Powell and next year’s expiration of key Fed appointments. In our view, economic fundamentals and institutional dynamics point to a baseline monetary policy outlook that is not meaningfully different from what would be expected with the current composition of FOMC participants – perhaps with a marginally faster return to a more neutral policy stance.

Amid the headlines surrounding Trump and Powell, recent economic data developments are strengthening the case for rate cuts. U.S. economic momentum has slowed compared to last year: Department of Commerce data show real consumption growth of approximately 1% in the first half of 2025, down significantly from the 4% pace recorded in the second half of last year. Inflationary pressures have also been milder than expected – partly because tariffs are taking time to filter through to consumer prices (see last week’s Macro Signposts, “The Economic Impact of U.S. Tariffs”^[1]). Some policymakers, including Fed Governor Christopher Waller, have made a case for an earlier move in July, while 10 FOMC participants expect two or more 25 basis-point cuts later this year.

The individuals speculated to be leading contenders to succeed Powell as Fed chair – including Waller, Kevin Hassett (Director of the National Economic Council), and Kevin Warsh (former Fed governor) – would likely advocate for faster and deeper rate cuts. Assuming sufficient consensus, the FOMC could potentially lower rates by 100 to 150 basis points (bps) from the current range of 4.25%– 4.5%.

However, this would not represent a radical departure from current policy; it’s at the lower end of current Fed estimates for the neutral rate. Thus, by cutting rates at a steady pace, the Fed under Powell could potentially reach neutral before a new chair is appointed.

Much hinges on the Fed’s estimate of neutral – and whether a Trump-nominated chair would argue for a level below the current central tendency range of 2.6 to 3.6%. While supply-side expansion could help limit inflationary pressures, higher supply-side growth is typically associated with elevated investment, which tends to raise the neutral rate. If such growth materialises, it would be difficult to justify a policy rate significantly below the Fed’s estimated neutral range.

In our view, the case for a much lower neutral rate appears inconsistent with the Trump administration’s optimistic growth projections. Both Hassett and Warsh have said that Trump’s tax and tariff policies could lift U.S. real GDP growth to around 3%.

Moreover, even if a Trump nominee pushes for a much faster return to neutral, the Fed, as always, makes policy decisions by committee. It would take more than one or two votes to sway policy dramatically away from a steady, measured return to neutral.

Why Fed Chair Powell will likely serve his full term

Despite persistent rumours and occasional threats from the president, we still believe it is highly unlikely that Trump will move to fire Powell before his term ends in May 2026. There are compelling legal, political, and practical reasons for this view.

• Legal constraints: The most significant barrier to removing Powell is legal. Earlier this year, the Supreme Court affirmed the Federal Reserve’s special status as a quasi-private institution, whose governors can only be removed for “cause” – a high threshold typically reserved for serious misconduct such as fraud. While some Republican lawmakers have tried to build a case for removal by pointing to cost overruns in the Fed’s building renovations, the Federal Reserve Board has quickly responded with reasonable rebuttals. Powell has also called for an independent Inspector General review and privately indicated that he would challenge any attempt to unseat him – likely remaining in his position while the matter is litigated.

• Political realities: Even if Trump could legally remove Powell, doing so would be politically risky and likely counterproductive. All Fed nominees require Senate confirmation, starting with the Senate Banking Committee. Given the current political landscape, it could be difficult for Trump to secure unanimous support from Republican committee members, especially if the move is perceived as an attack on the Fed’s independence. In the committee, a single Republican vote in opposition could derail a nomination. Two GOP members of the Senate Banking Committee, Thom Tillis and John Kennedy, have said that firing Chair Powell should be avoided, with Tillis saying it would “undermine the credibility of the U.S.”. Like his predecessors, Trump – in his first administration – struggled to advance controversial Fed nominees, with several high-profile withdrawals and failed confirmations in recent years.

• Economic and market consequences: Firing Powell could carry significant market risks. Past speculation about his potential removal has led to higher long-term interest rates and declines in equity markets – outcomes contrary to the administration’s goals. Leading economists and former Fed officials have warned that such a move could undermine confidence in the central bank, raise inflation expectations, and call into question the unique global status of U.S. capital markets. The likely consequences: steeper yield curves, higher rates, and a weaker dollar.

• Institutional checks: Finally, as noted above, it is important to remember that the Fed chair holds only one of 12 votes on the policy-setting FOMC. Even if Trump were to install a politically partisan chair, it is far from certain that the rest of the committee would support a dramatic shift in policy. It’s worth noting that of the current seven-member Fed Board of Governors – all of whom vote in the FOMC – only two were nominated during Trump’s first term, while the others were nominated by President Joe Biden.

Bottom line

Over the next few years, barring an unexpected negative economic shock or more concerning underlying inflationary pressures, we expect a steady return to a neutral monetary policy stance – first under Powell’s leadership through May, and then under the next Fed chair. Fed independence, combined with economic fundamentals and institutional checks, supports this baseline outlook.

In the near term, while Trump is likely to continue criticising the Fed and advocating for lower rates, we do not expect him to attempt to fire Powell. Instead, Trump will begin shaping the Fed through upcoming appointments, beginning with the expiration of Governor Adriana Kugler’s term in January and Powell’s chairmanship in May (Powell’s term as governor, distinct from his role as chair, runs through January 2028).

Whoever Trump chooses as next chair will, like any Fed leader, have to present a credible case for monetary policy decisions that garners Senate confirmation first and then a majority FOMC support. As with other institutions of the U.S. governing system, the Fed is structured with built-in checks and balances that limit the ability of any single individual to dramatically shift its policy trajectory.

By Tiffany Wilding, Economist, (with contributions from Libby Cantrill, head of public policy).

———

Notes:
[1] “The Economic Impact of U.S. Tariffs”

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U.S. President Donald Trump is close to completing his first 100 days in office, a somewhat arbitrary marker that entered the American lexicon during President Franklin D. Roosevelt’s time. While many believe a president’s influence and capacity for action may be greatest in this period, there is nothing particularly magical or predictive about the first 100 days in office. For some presidents, a productive first 100 days has translated into a relatively industrious time in office (Ronald Reagan is one example), while others who have struggled in the first 100 days have gone on to achieve key elements of their agendas (e.g., Bill Clinton). Looking at several metrics – legislative achievements, staffing in key areas and executive orders – President Trump’s first-100-day track record has been mixed.

On one hand, Trump has had no major legislative achievements, and his relationship with Congress – a predictor for future legislative success – is not particularly strong (at least as of now). Additionally, vacancies in vital positions remain throughout the executive branch, potentially hindering President Trump’s ability to advance his agenda at the executive level.

On the other hand, the president has been active in terms of issuing executive orders, ranging from financial deregulation, to trade, to the tax code. Of course, executive orders without subsequent congressional action often have limited effectiveness and are frequently more symbolic than substantive. Nonetheless, President Trump, similar to his predecessor, is finding executive orders the most straightforward way to leave his fingerprints on Washington.

While the first 100 days will make headlines, the first year is arguably a more important gauge of success, making the balance of 2017 critical for the Trump administration. This is for the simple reason that as we get closer to the midterm elections in November 2018 – when every House seat and a third of the Senate seats are up for re-election – it becomes increasingly difficult for members to take politically difficult votes. For instance, if we do not see some action on healthcare in the next few months, it’s doubtful Congress would bring it up again in 2018.

The same can be said about tax reform, another potentially politically thorny, not to mention highly complicated, issue. Real tax reform has not been done for 30 years – and even then it took several years to complete – for the very reason that it entails winners and losers. And the unveiling of the president’s tax plan may in some ways complicate tax reform even further, given that it is somewhat different from the House Republicans’ tax plan. It will likely take time to reconcile the different plans to get to one unifying, comprehensive tax bill that both chambers can pass.

We’ve been skeptical that comprehensive tax reform would pass through Congress quickly; our view remains that if we see action on tax reform at all, it won’t be until the end of 2017 or the beginning of 2018, and it will likely be smaller in scale and scope than any of the proposals we have seen to date. And if action on taxes slips beyond that time frame, it would become increasingly likely that we won’t see action until after the midterm elections (if at all), a development that markets would not welcome.

By Libby Cantrill, head of public policy 

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Markets react to Trump’s first speech to Congress.

The market’s overwhelmingly favorable reaction to President Trump’s first speech to a joint session of Congress was not necessarily surprising: President Trump veered away from the more protectionist and nationalistic tone of his inaugural address to instead deliver a more hopeful, conciliatory and unifying speech.

He sought to reassure nervous congressional Republicans that he is presidential, while at the same time, he tried to open the door with congressional

Democrats on some shared objectives, such as paid family leave and infrastructure.

Yet, however strong the speech was on style and however bullish the reaction has been among certain risk markets, President Trump’s speech did not significantly change the stubborn facts about policymaking in Washington.

The two priority issues for President Trump and congressional Republicans in 2017 – healthcare overhaul and reform of the tax code – are two of the most complex and time-consuming issues Congress can tackle.

To provide some context: Congress has not undertaken tax reform since 1986, when President Reagan had to use significant political capital to advance it (and it still took him several years). Similarly, it took President Obama 14 months to pass the Affordable Care Act (“Obamacare”) at a time when he had bigger majorities in Congress and a higher approval rating than President Trump currently enjoys.

Importantly, there remains very little agreement among congressional Republicans on how to replace Obamacare and how to reform the tax code. On healthcare, while there is broad agreement that Obamacare should be repealed, there is not necessarily consensus that there should be a replacement, not to mention a common vision about what a replacement may look like.

On tax reform, even with President Trump’s tacit endorsement of the controversial “border adjustment tax,” a centerpiece of the House Republican tax plan, there remain significant obstacles to the BAT in the Senate.

While tax reform can get done without the BAT, it would likely result in a smaller plan that would need to be reworked, which could easily mean a bill is not signed into law until 2018.

This is a long way of saying that while President Trump’s first speech in front of Congress was a success in many ways, it does not necessarily change the inherent difficulties of policymaking, especially in the complex areas of healthcare and tax reform.

By Libby Cantrill, PIMCO’s head of public policy.

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What’s top of Trump’s agenda?

It’s hard to believe that U.S. President Donald Trump has only been in office for a month, given the dizzying activity in Washington. Yet our observations from before the inauguration seem to be holding true, at least so far: Governing is indeed harder than campaigning.

This is especially the case when it comes to the ambitious legislative agenda of President Trump and congressional Republicans, which includes overhauling the healthcare system, reforming the tax code, rolling back financial regulation and boosting infrastructure spending. Addressing even one of these complex issues in one year would be tough under the best of circumstances; moving all of them would be downright Herculean.

Reality check

Why do we expect a slower pace for President Trump’s legislative agenda? For one thing, it was the Founding Fathers’ intent for Congress, particularly the Senate, to take a deliberative (read: slow) approach to lawmaking to provide the checks and balances to the executive branch. This is especially relevant for issues as complex as an overhaul of the healthcare system or tax reform. Further complicating matters is the lack of a unified vision among Republicans and President Trump on how to proceed; debate continues about how to roll back and replace Obamacare, and the controversial border adjustment tax is snarling tax reform discussions.

Additionally, while Republicans have a significant majority in the House and can pass legislation readily, it is a different story in the Senate: With 52 seats, Republicans lack the all-important 60-vote filibuster-proof majority. This means that to pass legislation, Republicans must either secure at least eight Democratic votes (which seems unlikely in an increasingly partisan Washington), or use an arcane process known as budget reconciliation, which allows the Senate to pass legislation with only 50 votes – but comes with strings attached.

Because of the way the reconciliation process will work in this Congress, Republicans would have to address Obamacare before they can bring up tax reform, should they want to use reconciliation to pass both bills (which is the plan). This is a key point, given that a healthcare overhaul could take all year (it took President Obama 14 months, even with the benefit of higher approval ratings, healthier majorities in both chambers and a shared vision for healthcare overhaul within his party). Tax reform could easily slip into 2018 (pushing back financial reform and infrastructure). And if it gets too close to the midterm elections in November of that year, tax reform may prove elusive.

Three ‘Ifs’

That said, it is still early days in the new Congress and administration, and if we know anything about Washington, it’s that things can change quickly and headwinds can rapidly turn into tailwinds.

What could change our outlook? It comes down to three (big) “ifs”:

1. If Republicans can quickly unite on a vision to repair or replace Obamacare
2. If policymakers can resolve the direction of tax reform, especially related to the border adjustment tax
3. If President Trump, who has sent somewhat mixed messages on tax reform and Obamacare, uses his bully pulpit to expedite the legislative process. (The president’s joint address to Congress on 28 February may give some indication of his approach.)

But all told, we think the prospects that President Trump will push through his policy agenda in the first year look tenuous at best.

By Libby Cantrill, PIMCO’s head of public policy

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What’s in store for Trup’s first year?

With the inauguration of the 45th president imminent and the market’s high expectations for policymaking, what is realistic for investors to expect from Washington in 2017?

We think the bottom line is that governing is harder than campaigning. Many of the items that President-elect Trump and congressional Republicans are looking to tackle in 2017 – a healthcare overhaul, tax reform, infrastructure – are inherently complex and time-consuming, even with Republican majorities in both chambers of Congress. So, while we expect policymakers to focus on advancing the Trump agenda, there is a good chance that some of these agenda items slip into 2018 given the realities of Washington.

Key policy initiatives

Obamacare: Repeal and replace?

One of the primary issues of overlap between President-elect Trump’s policy agenda and that of congressional Republicans is the repeal of Obamacare. However, there is less agreement about what comes after repeal – with Trump and some Republicans advocating for a “repeal and replace” approach, while other Republicans supporting “repeal and delay.”

If Trump’s approach is pursued – which seems more likely – it could have implications for the timing of the rest of his agenda. Healthcare policymaking is notoriously complex and time-consuming; it took Congress 14 months to pass Obamacare after holding more than 100 hearings in the Senate and 80 in the House, and Obamacare still managed to pass only on a party-line vote. Also, the committees in Congress that would be tasked to write at least part of the replacement bill will also be in charge of the tax reform bill, another complicated and formidable undertaking. Lastly, Trump has promised that a replacement bill will provide “insurance to everybody.” While Trump may walk back from these comments, the pressure for congressional Republicans to deliver a comprehensive, Trump-endorsed healthcare overhaul has increased, which might take longer (most of 2017?) than many expect.

Tax reform or tax cuts?

Another area of agreement between Trump and congressional Republicans is the issue of addressing the country’s tax code to make it more competitive. However, there is less agreement about how actually to do this. House Republicans want to proceed with tax reform on the individual and corporate side, while Trump has put forth a plan that focuses on tax cuts. Tax reform – simplifying the tax code, lowering rates and broadening the base – is notoriously more difficult and time-consuming than tax cuts, since it necessarily results in winners and losers. Yet, many would argue that only tax reform – not tax cuts – at this point in the economic cycle would lead to real improvements in productivity and therefore sustainable economic growth. For this reason, we expect House Republicans to try to advance a tax reform package, at least initially.

But there is a long way to go from here to there. No bill has yet been written, and it is not clear whether Senate Republicans are on the same page as House Republicans, especially when it comes to more controversial topics such as the “border adjustment tax,” which would tax imports and exempt exports.

Assuming tax reform is pursued (not just tax cuts), it will likely take longer than most expect given its complexity and may be a smaller package (e.g., rates not lowered as much) depending on where Republicans fall out on different controversial issues (e.g., the border adjustment tax). While the market appears to be pricing tax reform to be completed in 2017, there is a real possibility we don’t see a bill passed and signed by President Trump until 2018.

Infrastructure

While this is a topic that President-elect Trump discussed often on the campaign trail and one where there is generally bipartisan support, Trump has provided few policy specifics, and this is yet another issue where the devil is in the details. Given the ambivalence many Republicans have for increases in non-defense spending, Trump may need Democrats to help pass an infrastructure bill. It is not clear what the appetite for that would be among congressional Democrats. So this also could slip to 2018.

Trade

Unlike the aforementioned issues, which need congressional approval, the White House has significant discretion around trade. Indeed, one of the first actions President Trump is expected to take is to withdraw the U.S. from the Trans-Pacific Partnership. While this move is expected, Trump’s approach to trade broadly is unknown: Does he follow the advice of his U.S. Trade Representative Robert Lighthizer, who worked under President Reagan and will likely use a more carrot-and-stick approach with trading partners like China? Or will he follow the more extreme and protectionist advice of Peter Navarro, the head of the newly formed National Trade Council? At this point, we don’t know, and as such, trade remains the primary area for a more “left tail” (downside) outcome.

By Libby Cantrill, PIMCO’s head of public policy

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Q: What are the likely near-term policy priorities under the Trump administration and Republican Congress?

Libby Cantrill

Cantrill: Trade is one issue where Trump has been vocal for years. We will likely be in a more protectionist, anti-trade environment, especially considering the executive branch holds significant authority over trade decisions and treaties. The Trans-Pacific Partnership won’t proceed, for example, and Trump has indicated he would renegotiate or potentially even withdraw the U.S. from NAFTA (the North American Free Trade Agreement implemented in 1994).

His messages throughout the campaign also suggest Trump will focus on a protectionist immigration policy, hewing to a wider global populist trend, but details aren’t clear.

Outside of trade and immigration, other policies the Trump administration is likely to pursue should be more supportive of U.S. growth. Corporate tax reform, individual tax reform and infrastructure spending (where Trump has proposed programs up to $1 trillion over five years) are now more likely given the Republican majorities in both the House and the Senate.

We will likely see efforts toward financial deregulation, such as modifications to Dodd-Frank or the DOL fiduciary rule, though wholesale rollbacks are unlikely. A more limited expansion in the regulatory burden could help boost business confidence and investment spending. We are also likely to see Trump and the Congressional Republicans aim to repeal Obamacare.

We do expect Trump to tend to defer to Congressional Republicans in many of the areas where they’ve already laid the foundation for change, such as tax reform and the repeal of Obamacare; markets are likely to respond favorably.

Q: How do we expect markets will respond to Trump’s victory over the coming days, weeks and months, and what are the implications for investors?

Scott Mather

Mather: Three areas of the market we’re watching closely are volatility, inflation and currencies.
Volatility will likely increase substantially from the generally low levels we saw over much of this year. Central bank policy probably won’t limit volatility to the extent it has over the past several years, and we see potential for widening risk premia and credit spreads.

Both near term and also over the longer term, investors may want to position for higher inflation. Over the past several years, the markets have fluctuated between romancing different degrees of disinflation and failure to reach the inflation target. Going forward we think markets are likely to price a much more balanced view, weighing the possibility of an inflation overshoot at least as heavily as an inflation undershoot thanks to likely growth-friendly policies and a cautious central bank. At PIMCO, we have been preparing our portfolios for some time, emphasizing a defensive posture that hedges portfolios from those rising inflation expectations.

Finally, we expect increased pressure on the U.S. dollar to appreciate, strengthening in particular versus emerging market currencies. It’s a more mixed picture versus other developed market currencies as international investors seek alternatives to the dollar as a reserve currency. Our currency view has us looking across the currency spectrum for long-term pockets of value, especially in emerging market currencies, for instance the Mexican peso – which is feeling the impact of the Trump victory in light of his stance on trade – as well as the Brazilian real.

Q: How should investors be thinking about risk?

Mather: In general, we have been encouraging investors to consider a more defensive posture. That’s what we’ve been doing in most of our strategies, in different ways depending on the strategy. We still think the defensive approach is appropriate because of the likelihood of rising uncertainty and volatility, which will create risks but opportunities as well. Active investment management offers the flexibility to target those opportunities.
Bigger picture, we believe it’s important – especially in tumultuous times like this – for investors not to focus entirely on the downside, but to take a much more balanced view. As always there’s a distribution of risks for financial markets, and especially over the secular horizon we see widening tails on both sides of that distribution: negative and positive.

Scenario analysis is critical to portfolio management; especially in light of all the near-term uncertainties that could rattle markets, we believe it’s important to gather and assess information before taking a long-term investment stance. Specific to the post-election environment, we see a number of potential positives over the medium term as well as some potential negatives – it will be important to analyze the policy as it’s unveiled and make investment decisions accordingly.

Q: Has the election changed PIMCO’s outlook for monetary policy?

Mather: Going into the election, the markets were pricing a very high likelihood of the Federal Reserve hiking the policy rate at the December meeting. We still think that’s likely, though near-term uncertainty may slightly reduce the probability, and the decision would depend upon financial conditions. We think that even if conditions are a little bit tighter, and we see more market uncertainty, it will likely be offset by the higher inflation expectations I mentioned earlier. So on balance, we think it’s likely that the Fed will acknowledge a market that’s already pricing in a pretty significant probability of a December rate hike, and then go ahead with the move.

Looking at the more cyclical trajectory for the Fed, prior to the election, we thought the Fed might move two or three times before the end of 2017 (as we discussed in our latest Cyclical Outlook ). While that’s a little faster than what the market is pricing, it is still our base case. It’s too early to say what influence Trump may have on Fed leadership and its reaction function, as new appointments are required to fill existing vacancies and Chair Janet Yellen’s term expires in 2018.

Q: What should investors be watching for from the Trump administration in the near term?

Cantrill: In the days and the weeks ahead, investors and markets will spend much energy forecasting and later scrutinizing the individuals Donald Trump puts in place as advisors, both his economic advisors and chief of staff in the White House as well as important cabinet positions in the Treasury and State Departments. Investors will also be looking for more details on Trump’s economic agenda; at this point he’s only provided broad brush strokes. Investors would likely be comforted if he provides some more details prior to his inauguration in January.

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Investors have some anxiety about the election results.

With less than a week to go until the U.S. presidential election, investor anxiety about tomorrow’s outcome is running high, as evidenced by the recent move in risk assets. So what should investors (and others) focus on between now and Election Day? We think state polling in the coming days will be especially important.

Since last Friday’s revelation that the FBI is considering other possible “pertinent” emails in the Hillary Clinton case, several national polls have shown the presidential race tightening, continuing a trend we had observed even before Friday’s news.

But at the end of the day, national polls can only tell us so much. Because of the unique way we elect our presidents in the U.S. – through the Electoral College, rather than the popular vote – a handful of key battleground states will likely dictate next Tuesday’s outcome, as in so many prior races.

Between 10 and 12 of these battleground states are important, but arguably only a subset are truly critical to get to the needed 270 electoral votes to win the White House: Florida, Ohio, North Carolina and Pennsylvania. That is because Donald Trump would have to win all four if Clinton maintains her relatively healthy leads in the battleground states of Colorado, Virginia, Michigan and Wisconsin.

Pathways to the White House

In other words, even considering Friday’s news, Trump’s pathway to 270 electoral votes, although possible, remains narrow. To be even more reductive, it is unlikely Trump wins the White House if he does not win Florida.

Similarly, most pathways for a Clinton victory require her to win Pennsylvania. She can afford to lose certain battleground states (including Florida, Ohio and North Carolina) given her polling in others, but it’s hard to see her winning the White House if she loses Pennsylvania.

Polling in Ohio shows Trump with more than a three-point lead on average and shows Trump tied with Clinton in Florida and North Carolina (according to Real Clear Politics). Clinton’s lead in Pennsylvania remains solid, however, with an average four-point lead over Trump.

We should be getting more state polling in these four states (and the other battleground states) in the coming days, and we think these data are what investors should focus on – not simply the national polls.

Regardless, with a tightening race and a larger number of undecided voters this election cycle, the chances of an unexpected election outcome are not immaterial – and that could cause continued repricing in the market, as we’ve seen over the past few days.

By Libby Cantrill, PIMCO’s head of public policy

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