NEW YORK (Reuters) – Traders are less worried about political uncertainty in the run-up to the U.S. presidential election, with former Vice President Joe Biden remaining strong in the polls while Senator Elizabeth Warren has lost ground.
Implied volatility, which measures expectations for outsized equity price moves, has fallen significantly in the past few months for healthcare, financials and energy – sectors considered at risk of disruption or increased regulation under a Democratic president.
The decline in expectations for volatility tracks the poll numbers for Warren, who is considered to be among the most left-leaning Democratic candidates. Warren’s standing peaked in October, according to Reuters/Ipsos polling, and has trailed off since then.
“We were seeing a lot more volatility in September, October, November, when the odds of Elizabeth Warren getting elected were higher,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group. “Joe Biden seems to be the market’s safe candidate.”
John Smith