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CROSS ASSET: Reflation Theme Falters As Election Odds Firm For Harris

CROSS ASSET
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Election odd markets have tipped the Presidential Debate in favor of Vice President Harris. The chart below shows the shift in election odds today per PredictIt. Harris is up around 5pts, Trump is off by 5pts. The debate covered a broad range of topics across the economy, trade/tariffs, immigration, foreign policy. The market may have been looking for a stumble from Harris, like we saw from Biden at the first debate. Still, the focus going forward will be how opinion polls take shape, given recent outcomes have shown no clear winner. 

  • The market reaction has a softer USD, led by yen gains.  As we noted earlier Trump's victory in the first debate aided reflation and boosted USD sentiment. Firmer Harris odds is likely to see more of the status quo from a fiscal standpoint.
  • USD/JPY is under key support at 141.70 (Aug 5 low). The pair touching 141.30 in recent dealings, this paves the way for a test back sub 141.00, last seen at the start of the year. US yields are close to 2ps weaker across the benchmarks. Yen is outperforming the rest of the G10.
  • USD/CNH is down under 7.1200, although is not seeing much follow through and is lagging the yen.
  • US equity futures sit weaker, off 0.50-0.65%, with tech the weakest. Bitcoin is also softer, last near 56.7k, which was seen as another election gauge for Trump. 

 Fig 1: Election Odds Move in Favor Of Harris Post Presidential Debate 

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Election odd markets have tipped the Presidential Debate in favor of Vice President Harris. The chart below shows the shift in election odds today per PredictIt. Harris is up around 5pts, Trump is off by 5pts. The debate covered a broad range of topics across the economy, trade/tariffs, immigration, foreign policy. The market may have been looking for a stumble from Harris, like we saw from Biden at the first debate. Still, the focus going forward will be how opinion polls take shape, given recent outcomes have shown no clear winner. 

  • The market reaction has a softer USD, led by yen gains.  As we noted earlier Trump's victory in the first debate aided reflation and boosted USD sentiment. Firmer Harris odds is likely to see more of the status quo from a fiscal standpoint.
  • USD/JPY is under key support at 141.70 (Aug 5 low). The pair touching 141.30 in recent dealings, this paves the way for a test back sub 141.00, last seen at the start of the year. US yields are close to 2ps weaker across the benchmarks. Yen is outperforming the rest of the G10.
  • USD/CNH is down under 7.1200, although is not seeing much follow through and is lagging the yen.
  • US equity futures sit weaker, off 0.50-0.65%, with tech the weakest. Bitcoin is also softer, last near 56.7k, which was seen as another election gauge for Trump. 

 Fig 1: Election Odds Move in Favor Of Harris Post Presidential Debate 

Keep reading...Show less