BofA says the market is pricing in a Democratic victory next month, which could mean even more fiscal stimulus to follow


The firm notes that bond funds have seen their second-largest weekly inflows ever of $25.9 billion, with the market starting to adjust to the current election odds by pricing a a 'blue wave' outcome in November.

Adding that riskier high yield bond funds attracted $5 billion in the week to 7 October, the highest amount in 11 weeks.

"Blue wave election outcome (Democrats winning) has curiously flipped from consensus bear to bull catalyst in recent months."

Further noting that the market sees that as hopes for more fiscal stimulus to follow, before adding that they expect US stocks to "top" between election day on 3 November and the inauguration of the new president in 20 January 2021.