Wall Street had thought very well of Georgia on Tuesday night, with mostly stock futures and bonds in their sights as investors watched double matches for key senate seats plummeting to razor-thin margins in early yields.
MarketWatch’s Victor Reklaitis reported that analysts describe the races in Georgia as “about as close as you can get,” and there are expectations that the winners won’t be announced until Wednesday morning.
Democratic challenger Jon Ossoff followed incumbent Republican Senator David Perdue, with nearly 88% of the vote, having previously enjoyed a handy lead, according to data collected by the Associated Press.
In the other run-off, Democrat Raphael Warnock was also nearly tied, but also trailed incumbent GOP Senator Kelly Loeffler.
Senate races are an offshoot of the November general election, when none of the candidates reach the 50% threshold required to be declared a winner.
At stake for the markets is the prospect of a narrow Democratic majority in the Senate if candidates can beat the incumbents of the GOP.
If Loeffler or Perdue wins Tuesday night, Senate Republicans are expected to block further coronavirus control legislation and curtail Democratic plans for expansive spending after President-elect Joe Biden took office, experts said.
However, a Democratic clean-up in Georgia would give that party virtual control of that chamber, as Vice President-elect Kamala Harris would issue tiebreakers as the chamber’s president.
Futures for the S&P 500 index ESH21,
ES00,
were 0.4% lower, while those for the Dow Jones Industrial Average YMH21,
YM00,
were almost flat but tilted lower, and Nasdaq-100 futures NQH21,
NQ00,
were off 1.2% late Tuesday.
In the regular session, the Dow DJIA,
S&P 500 index SPX,
and the Nasdaq Composite Index COMP,
ended the session firmly higher for the political confrontations.
However, some of the biggest moves came from the bond market, with the 10-year government bond yield TMUBMUSD10Y,
knocking on the door of 1%, around 0.985%, as prices fell after prices ended at 0.955%, marking the highest 15:00 Eastern close since December 4, according to Dow Jones Market Data. The 30-year government bond TMUBMUSD30Y,
was also up nearly 4 basis points, yielding 1.744% from an afternoon close of 1.705%, also the highest rate in a month.
For the bond market, Democratic wins could contribute to bearish pressure on Treasurys as analysts say inflation expectations have risen in response as Congress may be more inclined to pass additional fiscal spending measures by majority, weighing on bond prices , which would boost yields. .
It is almost impossible to predict which outcome Wall Street deems most appropriate for pushing stocks further up in 2021. Last year, market participants had bet that a presidential victory for Biden, coupled with a majority of Democrats in the Senate, would pay off. scenario for additional financial support measures to support the economic recovery from the COVID-19 pandemic.
However, a blue wave did not materialize and markets rose in the last weeks of 2020 anyway.