With less than one month to Election Day on 8 November, it is time to take the temperature of the election campaign. Prior to the first TV debate, the presidential election seemed like a close race but Hillary Clinton has now regained the lead . After losing the first TV debate, according to most polls and commentators, Donald Trump's campaign has had a difficult time in recent weeks, peaking on Friday with the release of an 11-year old tape of Trump making derogatory comments about women. Since the release of the tape, several important Republican politicians have condemned Trump's comments and they have overshadowed the WikiLeaks release of Clinton's e-mails, including excerpts from Wall Street speeches.
Looking at the national polls, Hillary Clinton is leading by close to 5 percentage points (47.5% to Hillary versus 42.9% to Trump) meaning that Clinton has an 80% chance of winning, according to model calculations from FiveThirtyEight. Also, when looking at the swing states, Clinton has momentum and currently 260 electoral voters are solid or likely Clinton voters (538 in total, 270 to win).
Although it seems as though Clinton is the most likely winner, it is important to note that things can change quickly in politics. In August, many people said the election was a done deal but Trump still managed to come back. We do not know what unforeseen events could play out over the coming month. Also, there is still the last TV debate, which is due to take place on 19 October.
On Friday, we published our presentation , 'Trump versus Clinton - the economic and financial implications of the 2016 US election' , 7 October 2016. If Donald Trump becomes the next US president, it could trigger substantial fiscal easing and would also entail a risk of a global trade war. The independence of the Fed could also be threatened. If Clinton becomes the next US president, it would be more like status quo, in our view. We view a Trump win as medium-term negative for the USD versus G10 currencies and positive versus EM currencies. A Trump win would be negative for global equities and pose upside risks to US yields. We believe a Clinton win would be marginally negative for the USD versus EM currencies and positive for global equities. A Clinton win would probably have a negligible effect on US yields.
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