The markets have priced in a victory by the Democrats in the US Presidential elections, Priya Misra of TD Securities said in an interview to CNBC-TV18.

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But if the Republicans led by Donald Trump win, there could be a major unwinding of the positions built up in anticipation of a Joe Biden victory, she said.

“The market is pricing in this democrat sweep. If that is the scenario, we get little bit more of the rise in rates as the market starts to price in more fiscal stimulus, probably weaker dollar and this is better for global growth, expect Biden to be very different from the Trump agenda of going against the world alone. So I think that is a weaker dollar, probably better for emerging markets (EMs) and flows into EMs should be better under that scenario. I think it is largely priced in. I don’t see that as a big surprise element,” she said.

“If you do get a Trump win, you unwind a lot of price action over the last couple of months. I would say as important as the presidency is, it is the senate – who controls the senate is going to be extremely important for markets. If you get continued split government – let us say you get Biden but you continue to get a republic in senate, I think again there is an unwind of the risk-on, there is going to be significant fiscal supply, that is when the dollar can strengthen in a flight to quality mode. That would be a big surprise,” she added.

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(Edited by : Santosh Nair)

First Published:Nov 3, 2020 9:42 AM IST