Earlier this year I discussed the election as a major narrative that would drive the markets. At the time I noted that markets had not yet focused on this narrative and likely wouldn’t until later in the year. We are now at a point where the markets can no longer ignore the election. With the horrific events over the weekend, and the quick follow of the RNC, the news cycle is now dominated by politics.
The odds of a Trump victory have increased after this weekend’s events. The media’s focus has shifted away from some of the questions surrounding Biden’s ability to serve. This shift is beneficial to Trump. Our research shows that, while Trump is currently leading regardless of his opponent, he fares better against Biden than he does against Harris who is the most likely Democratic replacement should Biden step down. See the odds tables below that show both scenarios. These odds were calculated on July 10th and may have shifted even more since then, we will have to wait for new polling data to find out.
The PredictIt betting markets provide a real time input for how people are thinking about the election. A glance at the last 30 days of PredictIt market data shows two very clear inflection points in this election cycle. The first inflection point is the June 27th debate. You can see that immediately following the debate Trump’s odds nudged up slightly while Biden’s odds plummeted in favor of Harris. The question of Biden or Harris at the top of the Democratic ticket has been the dominating story in U.S. politics until this weekend. You can see that immediately following this weekend’s events Trump’s odds nudged up yet again, while Harris faded.
Equity markets have also started to price in the higher likelihood of a Trump victory. We can see evidence of this in industry performance and lower volatility (due to less uncertainty) being priced into markets.
This data provides a clear snapshot of the current landscape, yet the election is still months away. As events unfold and the national focus shifts, we can expect these data points to evolve. Staying informed on these changes will be crucial for understanding future market movements.
New Decision 2024 Video Series
I am excited to announce the launch of our latest initiative, the "Decision 2024" video series, where I will be your host. This series aims to deliver a balanced perspective of the upcoming election's impact on a variety of topics such as the economy, policy, and society. Click here to view the first video in the series.
