The Ripple Effects Of US Election Results

While US election results and the inauguration of President Biden have captured the world’s attention, we look at the possible effects on our financial markets as the new administration gets to work.

01.29.2021 - Vincent Tonietto - Vice President, Portfolio Manager

There is no denying the drama and uncertainty that accompanied November’s US election. Some pivotal questions— such as who is to be the next president, and which party will control the Senate and House of Representatives—have finally been answered.

In November, we saw financial markets breathe a sigh of relief immediately following election night as some uncertainties were ruled out. Following the recent elections in Georgia—where the Democrats earned a razor-thin Senate majority—we expect the overall impact on markets will likely be neutral. Alternatively, we anticipate that while corporate tax rates are likely to rise, households will benefit from important stimulus cheques, and the odds of reflationary policies have increased.

While policy unfolds south of the border, we believe Canada will feel some ripple effects of a Biden White House. To what degree? Right now, the answer is: It depends. Canada’s Keystone XL Pipeline and other fossil fuel infrastructure, for example, are unlikely to expand in the United States given Biden’s proposed “clean energy revolution.”[1] The US clean technology industry will also receive strong government support, potentially prompting further competition for Canadian firms. Whether a reset on US/Canada relations will help secure Keystone XL’s survival or create opportunities for our clean energy and mining sectors remains to be seen. Managing Canada’s energy transition and supporting economic growth will be challenging as fossil fuels remain a key contributor to overall economic performance.

Financial markets view the appointment of former Federal Reserve Chair Janet Yellen to the role of Treasury Secretary as a strong indication of Biden’s intent to manage the recovery with extraordinary fiscal support. Since the onset of COVID-19, the US Federal Reserve (the Fed) and other major central banks have been clear about maintaining their accommodative policies for a substantial period. The markets applauded Yellen’s selection as she can leverage her Fed experience in working with Congress to coordinate US fiscal and monetary efforts.

Investors are anticipating considerable spending by governments and central banks in the coming years as fuelling economic growth remains a priority. We saw longer-term interest rates rise over the past several weeks as stock markets hit new, all-time highs thanks to stretched valuations in some pockets. Though we are all looking forward to the pandemic’s eventual end, we know transition moments never unfold in a straight line and the longer-term effects of this crisis remain to be seen. We must remain focused on the fundamentals and pursue our disciplined approach when taking investment decisions.


  1. “The Biden Plan for a Clean Energy Revolution and Environmental Justice",


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