A federal election probably won’t cramp the trading power of the loonie, CIBC said Thursday.
In a new report, CIBC chief economist Avery Shenfeld said that, although markets “abhor” uncertainty, there’s no evidence that previous elections have affected investor confidence.
“If anything, the period from the dissolution of Parliament to the day after the vote has been one in which Canadian equities have fared well and outpaced those stateside,” Shenfeld said. “Canadian bond spreads have narrowed to treasuries, and the Canadian dollar has gained modestly.
“That’s particularly evident if one strips out the 2008 election, which had the misfortune of coinciding with the heights of the U.S. financial crisis.”
What would affect the bond market, he said, is if an election result could knock the country off its deficit elimination track.
So far, Shenfeld said the opposition parties haven’t come out strongly against deficit reduction, and that the “best bets” are the country will stay on course.
“Thus far, markets have taken the election call in stride, with no response in the exchange rate, the bond market or equity performance,” he said. “If current polling holds up, this election could prove uneventful for financial markets.”