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US election could be worse than any black swan: Citi

The presidential election has the potential to cause considerable volatility and could possibly re-price a number of markets across the globe, analysts at Citi highlighted in a new note on Monday.

"With huge uncertainty around the outcome and the consequent shape of economic and political policymaking, many asset prices are likely to see increased volatility. This, in itself, could provide a considerable headwind to growth," analysts at the bank, including Tina Fordham, said in the note.

A "black swan" event is a metaphor used by the investment community to describe an event that comes as a surprise, such as the crash of the U.S. housing market in 2008 or the Japanese earthquake of 2011. However, Citi sees these as not being able to cause the maximum disruption in markets.

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"Time and time again we have seen unexpected events cause strong short-term moves in markets that have then dissipated as the policy response bites and the core themes re-assert themselves," it said.

Thus, investors are expected to be on their toes as the year progresses with Citi suggesting an unexpected outcome to a widely anticipated event – like the election – could cause a significant and potentially lasting re-pricing of assets on both a domestic and global level.

Democratic presidential nominee Hillary Clinton holds a substantial lead over Republican Donald Trump in most polls and U.K. bookmakers are giving far better odds on a Trump win than a Democrat victory. Citi has maintained its 65 percent probability of a Clinton presidency, but is not being overly complacent, saying that polls and the betting markets have been volatile like that seen during the U.K. referendum on its EU membership.

"Underlying sentiment appears to be fairly entrenched. This is a recipe for a shock to market pricing," it said.

"Who will win? How much influence does the president actually have? Who will be the main players in the policy process? What would the economic, political and social policy mix of the two parties mean for U.S. and global economic growth, for international policy, world trade and global security? There is great uncertainty, and uncertainty translates into risk premia both in economies and financial markets."

Meanwhile, Moody's said Wednesday, that the "most immediate" risk to the global economic outlook is associated with the elections in November.

In the credit ratings agency's global macro outlook report, published on Wednesday, Moody's analysts said that next inhabitant of the White House - be it Republican candidate Donald Trump or Democrat Hillary Clinton - could upset the global growth trajectory.

"There are a number of downside risks to the global economic outlook, the most immediate being associated with the US presidential election in November," Moody's analysts led by Madhavi Bokil said in the note.

"A change in U.S. policy stance that contributes to a weakening of the current global trade and security architecture could have a detrimental impact on global confidence and growth, and would prompt us to revise our forecasts," the report noted.

—CNBC's Holly Ellyatt contributed to this article.