Trump gets Covid – US election update

Welcome to our latest US political update with 29 days until the presidential election.

Each week we will take a look at the likes of policy changes, polling shifts, the continued impact of Covid-19, the geopolitical stances that the candidates are taking and of course, the economic impact on the US, the dollar and global trade. The US presidential election remains the most important political event globally and markets are starting to pay attention to the run-in to November’s polling day.

Trump vs Covid

In the most 2020 news possible, an election that already had Covid-19 as the main plot point is now being fought by one of the candidates from a hospital bed. President Trump announced early on Friday morning that both he and his wife Melania had contracted Coronavirus and were self-isolating as a result before being admitted to hospital over the weekend.

Any news during an election cycle is influential and the fact that the President has contracted a virus that he has spent most of the past 8 months denouncing as a hoax means that his diagnosis will have an effect on polling.

Surveys through the past few months have shown that Republicans are much less likely to view the virus as a personal health threat to them and it’s also been indicated that Trump downplaying the virus is probably a significant driver of that.

Either Trump gets sick from this and people change their minds as to the severity of the pandemic or he bats it away, or at least appears to, and his actions bolster the idea that Covid-19 is not something the average American should be concerned about.

What happens now?

Until Trump leaves hospital the campaigns are in a holding pattern with Biden’s team taking the decision to halt all negative media until further notice. In the grand scheme of things, we don’t think this will change much from a logistical point of view beyond the likelihood that a week’s worth of campaigning is done remotely.

The next debate between Trump and Biden is set to be a ‘town hall’ with members of the public asking the candidates questions. Although this will be within the CDC’s recommended quarantine period, we expect it to go ahead albeit with greater emphasis put on those in the audience taking appropriate measures; there was a conspicuous absence of facemasks at the first debate.

Market reaction

Initial market reaction on the announcement was a fairly simple move out of riskier assets and into haven currencies; stocks were lower and the USD, JPY and CHF rose. In the short term, we would expect similar performances on bad news with reports that the President could be out of hospital within the next 24hrs boosting stocks and pushing the dollar lower so far this morning.

Polling

Polls over the weekend that have taken into account the quite dreadful debate, but not Trump’s Covid-19 diagnosis, have seen Biden extend his lead to as many as 14 percentage points. It will be interesting to see whether Trump’s illness generates sympathy for the President although it does run counter to the ‘strongman’ image he is so fond of.

For now, he has a lot of running to do to catch up with his opponent.

Have a great week.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.