Election jitters are rising in the US as the gap between Trump and Biden begins to tighten, with less than 50 days to go before the Presidential election on 3rd November.
An interesting recent survey from the Pew Research Center indicated that 83% of the US
electorate consider the coming election to be “really important”. This compares with just 73% expressing that view in 2016.
So there is every prospect of a very high turnout on 3rd November, possibly even breaking the record 65% turnout set at the 1908 election, won by William Howard Taft.
Also very interesting has been a recent survey from CloudResearch which indicated that 11% of Republicans vs. just 5% of Democrats are unwilling to reveal their true voting intentions to online or telephone based pollsters, over privacy concerns.
Markets could therefore remain choppy right through to November, given the prospect of a very high turnout, coupled with uncertainty over the true intentions of the electorate.
Away from the election, other events this week caused further choppiness in markets.
Firstly, the Federal Reserve held a two-day meeting to decide interest rates, after which Chair Powell held forth on their new approach to US monetary policy.
It was confirmed that US interest rates will remain at or very close to zero for at least the next three years, until the US reaches full employment and inflation reaches 2%.
However, quite some choppiness was seen in the US dollar immediately after the meeting since no further easing measures were announced, which slightly disappointed the market.
CTFC (Commodity Futures Trading Commission) data show that speculative positions against the US dollar are currently at a 10 year high. So dollar choppiness seems likely through to November.
The dollar is currently at a 2 year low against the Euro and a 3 year low against the Swiss France.
One currency which has not been doing so well against the dollar recently has been the pound sterling. Sterling fell 4% against the dollar in the first half of September as tensions with the EU rose over the Internal Markets Bill, currently making its way through the UK Parliament.
In a hopeful sign this week Ursula von der Leyden, the EU Commission President, said she thought a trade deal was still possible, despite the “very unpleasant surprise” from the UK.
Notwithstanding this, the Internal Markets Bill is also highly contentious within the UK. The key issue being who has the ultimate final say over the UK’s internal trade rules – Westminster of the devolved governments. We expect further choppiness in the pound as the battle plays out.
Risk Warnings
Please note that the investments referred to in this document are subject to market fluctuations, there can be no assurance that appreciation will occur and it may be possible that losses will be realised.
Past performance is not necessarily a guide to future performance and the value of investments can fall as well as rise.
