As odds harden on a Democrat clean sweep at next month's U.S. elections, measures of policy and financial market uncertainty are starting to dissipate and the gap between implied volatility in November and December closes. The so-called 'fear gauge' VIX of S&P500 implied volatility and VIX futures are at 6 week lows as bookies put a clean sweep at close to a 60% chance. The World Economic Policy Uncertainty Index fell back further from pandemic peaks in September and now back lower than it was in August 2019. Wall Street analysts argue the growing chances of a clear win cuts the chances of a contested election for a protracted period of time and bakes in a comprehensive fiscal stimulus for the pandemic-hit economy next year without the partisan wrangling currently preventing a government support deal being agreed before the election.
Chart by Ritvik Carvalho and commentary by Mike Dolan
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