Or just the prospect of avoiding a long, drawn-out legal challenge?
US politics is playing an increasingly influential role in stock markets, with the bounceback this week driven by the possibility of targeted stimulus measures.
The market may be getting a little ahead of itself given the Democrats reluctance previously to engage in a watered down approach but desperate times call for desperate measures and the warnings coming from the Fed and others suggest that moment is upon us.
It may also help that the Democrats lead has widened in the polls which may give them some confidence that a more ambitious, comprehensive package can more easily be passed in January.
In a last ditch attempt to close the gap, Trump may be increasingly tempted to take bigger gambles which could backfire and hand more of a lead to the Democrats. The decision to cancel the negotiations is seen by some as an example of this, not to mention his shift on Covid.
Trump has clearly ramped it up this week and the polls suggest voters aren’t yet warming to what he has to say. That, of course, may change but Democrats may be feeling more confident.
The vice-Presidential debate won’t change the views of the electorate, which the Democrats may be happier with given their lead. It was far more civil than the exchange between the Presidential candidates, although they did shirk the tougher questions.
Naturally, we’re all left speculating on whether the markets are positioning for – and therefore welcoming – a Democratic President or even a clean sweep. I remain cautious on this front.
They may not view it as negatively as they did before and it may bring economic benefits in the near-term, but I wonder whether the relief we’re seeing could be a reflection of widening polls and therefore the potential for the result being contested in the courts. I guess we’ll see if the polls narrow again.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.