Trump-Clinton Market Flareup Is Far From a Panic: Reality Check

(Bloomberg) -- For all the angst over the tightening U.S. presidential election, if investors take a step back they'll see financial markets are far from a full-on panic.

In a sign that all the hand-wringing is still limited by historical standards, a Bank of America Corp. index tracking global volatility across asset classes is below its average for 2016, even as the race has grown more competitive since last week, when the FBI reopened an investigation into Democratic nominee Hillary Clinton's e-mails.

Investors can glean a similar story from the Mexican peso, among the best market barometers of the race. While it's weakened in five of the past six days, the currency is still up about 3 percent from a record low in September, indicating traders see a lower chance of a victory by Republican nominee Donald Trump, who has pledged to renegotiate trade agreements and build a wall along America's southern border. Then there's gold, a traditional haven that's on a five-day winning streak. But it had a longer run in September, and is right around its six-month average.

While global bonds have rallied on the increased uncertainty, the market is only paring losses from a brutal October, which was the worst month since September 2014, according to the Bloomberg Barclays Global Aggregate Index. The S&P 500 index has returned about 5 percent this year, including dividends, and remains about 4 percent from a record high. In Europe, stocks are more than 8 percent above levels from the immediate aftermath of the U.K.'s June vote to leave the European Union.

“People talk about big moves in the Mexican peso and Swiss francs and even gold, but the moves really haven't been that big,” said Russ Certo, managing director of rates at Brean Capital in New York. “Sometimes we climb the wall of worry. I'm discounting a lot of the emotion that I see coming across.”

Granted, anxiety is higher than it was before the events of last week, as the Nov. 8 vote approaches. The Chicago Board Options Exchange Volatility Index, the so-called fear gauge, climbed to the highest since June, while the Merrill Lynch Option Volatility Estimate index is the highest since September.

Regardless, the capital markets keep humming along, even with the mounting anxiety. Six investment-grade bond deals priced with little or no concessions on Nov. 1.

To contact the reporter on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Mark Tannenbaum