To be sure, the bond market absolutely CAN experience significant volatility in response to election outcomes, but the extent of that volatility depends on the election in question. For instance, 2020’s presidential election paled in comparison to 2016 in terms of the market reaction. And 2018’s midterms arguably had no impact.
To clarify “no impact” in 2018, this is based on other moving pieces at the time (Brexit news, CPI data, global economic shift). If we zoom in close enough, there is often detectable volatility over shorter time horizons. Using 2020 as an example, it seemed significant at the time, but was quickly lost in the shuffle of the late 2020 uptrend in rates.
Regardless of what’s technically warranted, any time there’s enough buzz surrounding a certain reaction, the buzz can serve as it’s own motivation for market movement (even if the elections themselves shouldn’t otherwise have as much of an impact). That may be the case to some extent this week as the average market participant thinks a GOP sweep is generally associated with stronger levels in both stocks and bonds. Either way, any election-related volatility is simply a distraction between now and Thursday’s CPI report.