US Election 2024

Podcast: Harris wins debate, but FOMC trumps politics for now

Saxo

Summary:  In this week’s Saxo Market Call, Søren Otto and Saxo Chief Macro Strategist John J. Hardy dissect the market implications of the recent US presidential debate between Vice President Kamala Harris and former President Donald Trump. Below are some of the key takeaways from their conversation, focusing on the debate’s influence on market sentiment, polling, and potential policy shifts.

A shift in betting markets

John Hardy began by noting how betting markets reacted to the debate, with a solid shift in favour of Kamala Harris, bringing the perceived outcome back to complete balance after the odds had recently shifted in Trump’s favour. According to Hardy, Trump initially came across as "stronger and more coherent than expected," but as the debate progressed, Harris "found her stride," sharpening her critiques of Trump.

“Harris sharpened her criticisms of Trump, while he seemed to rely on more repetitive talking points like ‘you’re destroying the nation,’ which resonate with his base but don’t seem to make a significant impact on undecided voters,” Hardy explained.

Impact on undecided voters

Søren Otto raised the point that the debate’s real impact was likely limited to a small group of undecided voters. Hardy agreed, stressing that the majority of voters have already made up their minds.

“This is really about a small group that could swing one way or another,” he said, pointing out that the debate’s influence would be felt mainly among that narrow segment of the electorate.

Harris’s debate performance: better than expected?

Søren asked whether Harris’ performance exceeded expectations, a sentiment reflected by viewers on social media. While Hardy acknowledged that she did well, he suggested that her delivery appeared more polished than in previous public appearances.

“Harris came across as confident and clear, though at times a little rehearsed,” Hardy remarked, adding that this was still an improvement over some of her earlier, less focused performances.

Celebrity endorsements: Taylor Swift's influence

One of the more bigger twists came with Taylor Swift’s endorsement of Kamala Harris immediately after the debate. Hardy emphasised the significance of Swift’s cultural influence, particularly among younger voters.

“Taylor Swift is more than just a pop star. She’s incredibly influential, especially among young voters, many of whom are women,” Hardy remarked. Swift’s endorsement could mobilise a key voting bloc that historically leans Democrat, making her role in this election potentially decisive.

Market reactions: currency movements and the Fed’s role

As the conversation shifted to the markets, Hardy noted that the debate itself did not trigger significant market movements. However, some hawkish statements from a Bank of Japan member during the same period caused notable reactions, particularly in currency markets.

“The Japanese yen saw a strong rally after the BoJ comments, which overshadowed any immediate reaction to the debate,” Hardy said.

He explained that while market participants are keeping an eye on the election, other factors such as today’s US inflation release and Federal Reserve policy are currently more pressing concerns. For example, the Consumer Price Index (CPI) report, released shortly after the debate, would likely have a greater impact on the markets than the political event itself.

FOMC meeting: a key market driver

While the presidential debate did not have much direct market impact, Hardy believes that the FOMC’s decision on interest rates next Wednesday, 18 September, is critical for equities, bonds, and currencies in the near term.

According to Hardy, the decision to cut the policy rate by either 25 or 50 basis points in next week’s FOMC meeting will be far more important for markets than the US election for now. Today’s CPI figure may have an impact on whether the Fed swings one way or the other.

Sectoral implications: Trump vs Harris

Hardy also discussed the potential impact of either candidate winning the presidency on specific market sectors. A Trump victory could benefit European defence stocks and fossil fuels, while Harris’s focus on clean energy and social spending might boost renewable energy sectors. However, he cautioned that “gridlock in Congress is a likely outcome in a Harris victory scenario,” meaning not much will get done from her agenda.

Conclusion: market focus on immediate concerns

Looking ahead, Hardy believes that while the election will become a larger market focus as November approaches, immediate concerns like inflation and the Federal Reserve's decisions will continue to dominate.

“For now, I think the market is primarily focused on more immediate concerns like inflation and the Fed,” he concluded.

The episode ended with a reminder to keep watching both the odds and economic data as Election Day nears, as these will provide critical clues to both political and market outcomes.

Listen to the full episode or subscribe to the podcast here.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

The information on or via the website is provided to you by Saxo Bank (Switzerland) Ltd. (“Saxo Bank”) for educational and information purposes only. The information should not be construed as an offer or recommendation to enter into any transaction or any particular service, nor should the contents be construed as advice of any other kind, for example of a tax or legal nature.

All trading carries risk. Loses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money.

Saxo Bank does not guarantee the accuracy, completeness, or usefulness of any information provided and shall not be responsible for any errors or omissions or for any losses or damages resulting from the use of such information.

The content of this website represents marketing material and is not the result of financial analysis or research. It has therefore has not been prepared in accordance with directives designed to promote the independence of financial/investment research and is not subject to any prohibition on dealing ahead of the dissemination of financial/investment research.

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.