This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Here's Why Bonds Matter on Election Day

A Mitt Romney victory, on the other hand, would leave investors with a lot of questions.

Romney has said he would remove Bernanke as Fed chairman if he wins the presidency. The former Massachusetts governor has also expressed a lack of enthusiasm for monetary stimulus, so the fate of quantitative easing would be left in doubt.

In addition, Romney has promised to rein in spending, and his policies have seemed to favor less central banking activity and less bond buying, which could begin to boost the yield in treasuries and eventually lead investors back into higher quality credit treasury bonds. Analysts aren't sure how long, though, a massive move like this would take.

Municipal bonds are another beast for investors to consider.

Right now, the ultra-appealing, tax-exempt munis are a safe haven for many investors, but negotiations about the fiscal cliff could bring about broad-based tax reform.

If Congress decides that it wants to eliminate the tax exemption on munis, investors would have far less incentive to invest in these bonds.

If Congress doesn't lift the tax exemption, or, say, politicians decide to allow for some exemptions to remain in place it could become an even more appealing investment if income taxes increase -- a case that one analyst said could happen under Obama.

"If Obama gets reelected and the Bush tax cuts expire for the top wage earners then you're going to have top tax rates go higher, so higher income taxes are obviously a positive for the tax exempt market," said Susan Courtney, head of the Prudential fixed income's municipal bond team.

She also added that, if Congress decides to eliminate tax exemption on munis, another big question would be would some bonds would be grandfathered in for the exemption.

If so, lawmakers would have to determine a date for which bonds would be tax exempt and which bonds would not. In that case, the tax-exempt munis would become much more valuable to investors.

-- Written by Joe Deaux in New York.

>Contact by Email.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $126.60 0.15%
FB $80.00 -1.48%
GOOG $567.68 -1.33%
TSLA $193.88 -3.36%
YHOO $43.44 -1.63%


DOW 17,856.78 -278.94 -1.54%
S&P 500 2,071.26 -29.78 -1.42%
NASDAQ 4,927.37 -55.4390 -1.11%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs