(November 9 – 09:10 ET) – “Bond traders are supposed to dislike uncertainty,” writes Jonahthan Fuerbringer in today’s New York Times.

“Yet when they woke up the morning after Election Day still not knowing for sure who would occupy the White House next year, traders took the news in stride. As a result, interest rates and the dollar were little changed yesterday.”

“Why the minimal reaction? Because, traders said, for the last few weeks the bond market had been expecting Gov. George W. Bush of Texas to win the presidency. And the outcome, despite the narrowness of the race and the lingering doubt over the results in Florida, suggested to them that Mr. Bush was more likely than not to emerge victorious.”

” ‘The bond market is telling us today that there is a good shot that Bush is the guy,’ Thomas Connor, the head government trader at J. P. Morgan Securities, said.”

“Investors had sold bonds and pushed interest rates higher in recent weeks, analysts said, because Mr. Bush’s promise of a $1.3 trillion tax cut was seen as a bigger threat to the projected government surpluses than Vice President Gore’s budget proposals.”

“All during the campaign, Mr. Gore, with his promise to reserve more of the surplus to pay down the federal debt, was considered by traders to be somewhat better than Governor Bush for bonds. And if Mr. Gore does win the Florida recount and the presidency, there could be a rally in bonds.”

“But if Mr. Bush wins, the outlook in the bond market could then become cloudier as investors wait to see how a Republican Congress and the Republican president run Washington together for the first time since 1955.”

“There are several factors that limit any big move up in interest rates on a Bush victory, which is why traders and analysts do not expect interest rates to move much higher than their present levels for the time being. The yield on the Treasury’s new 10-year note was at 5.84 percent in late trading yesterday, down from 5.86 percent on Tuesday but up from 5.62 percent Oct. 23.”

“Despite the difference between Republicans and Democrats on taxes and spending, the two parties have moved much closer on overall economic policy since Ronald Reagan won the presidency in 1980. In addition, the economy appears to be slowing from its brisk growth rate of the last several years, which should keep some downward pressure on interest rates. And no tax cuts or spending increases will be able to change that outlook immediately.”