While the tightening in the US election has sparked short-term concerns, investors have also been troubled by potential threats on the horizon, said Dan Suzuki, an investment strategist at Bank of America Merrill Lynch. “We think there’s a lot to be concerned about,” he said.
Hopes that members of oil-producing cartel Opec, along with other major crude exporters, will agree to cut output at a meeting scheduled for later this month have cooled. The price of US crude oil, which slid 1.5 per cent on Thursday, has fallen 14 per cent after touching a high of $51.93 in late October.
Other risky assets have also been under pressure in a sign that investors are reducing their bets before the election. The risk premium investors demand to hold the debt of low-rated US companies rose to 5.15 per cent on Thursday, from as low as 4.6 per cent two weeks ago, according to BofA data.
Investors also point to rising inflation expectations pushing up bond yields and the potential for a sharp rise, or “taper tantrum”, should central banks begin to rein in accommodative monetary policies.
“Whether it is now or whether it is next year, the taper tantrum risk