Bush is a slight favorite for voters sticking with devil they know rather than the one they don't. We're in a quasi war-time economy that favors the incumbent.
What impact will it have on the bond market?
I think the election itself is a positive for the bond market to react to. It creates a lot of uncertainty for markets and a safe haven trade for bonds as people react to the possibility of a terrorist attack, negative campaigning and general uncertainty. All those factors favor asset allocation from stocks to bonds.
There's not enough specific proposals for the bond market to react to. Kerry says he's going to do a small tax increase but have a big medical care program. Bush's only program is that he said he would make tax cuts permanent and a vague thing about cutting spending. Their specific proposals imply a bigger deficit. It's hard to believe that there are going to be any spending cuts. Both candidates have a plan but what they'll actually do is anyone's guess.