Contrarian Who Bet on Trump Upset Now Sees Biden as Top Risk

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James Athey, a money manager at Aberdeen Standard Investments, was one of the few betting against market predictions of a comfortable U.S. election win for Joe Biden and a likely Democrat sweep of the Senate.

Now, as votes are being counted and with the outcome looking like a protracted affair, Athey is doubling down on buying safer assets. He is keeping overweight holdings in U.S. Treasuries and has boosted a long position in the Japanese yen, betting the uncertainty won’t be resolved soon. The main risk for markets is that Biden wins presidency while Republicans hold onto the senate, creating a policy deadlock, he said.

Contrarian Who Bet on Trump Upset Now Sees Biden as Top Risk

“A Biden win is probably worse for risk assets than a Trump win,” he said in emailed comments. “We are not going to get presidential clarity for a good while yet. That will keep risk nervous.”

Athey didn’t buy into the market narrative of recent weeks that Trump’s chances of winning were little more than 10%, and weighted his portfolio accordingly. While other investors were bracing for a selloff in Treasuries on the prospect of more fiscal stimulus following a Biden win, Athey went the other way and bought the securities in the seven- to 10-year segment of the yield curve.

U.S. 10-year bonds surged Wednesday, with yields falling 10 basis points to 0.80%. Athey said that he added to his long position on Australian bonds Wednesday. The dollar reversed gains versus the yen to trade slightly lower at 104.33.

©2020 Bloomberg L.P.

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