Norman Villamin

With voting now completed across the continental United States, it is confirmed that Donald Trump is making a comeback to the White House.

As the US elections loom large on the horizon, investors are bracing for market turbulence.

After a historic US pre-election debate, commentators agree Kamala Harris has profited, while Donald Trump’s ratings slipped, but how have markets responded?

The market turmoil of recent weeks has shifted the probability of a Fed rate cut dramatically from only several weeks ago. Indeed, whereas markets were previously cautious about a rate cut as early as September, by mid-August, markets began to price in an equal probability of a 25 bps rate cut as a 50 bps cut in September.

The attempted assassination of Donald Trump, Joe Biden's withdrawal from the race, and the rise of Kamala Harris: unexpected twists have emerged in the US presidential election.

We recently concluded a series of dynamic mid-year Investment Outlook events in key global cities, all with the theme of “Back to the Future.” 

Our experts examine the tumultuous US election landscape and historical market behaviour during election years, as well as anticipate the fiscal challenges awaiting the next president amidst record-high US federal debt levels.

US national government debt-to-GDP reached 120% in 2023, recapturing the level seen following years of wartime spending in 1945.

Strong Q1 economic data from the US manufacturing, housing and employment sectors, combined with inflation of between 3.5–4% since mid-2023, have caused markets not to only price out the six rate cuts they had priced in up until the start of 2024, but, more recently, to also begin to question whether the Fed might forego rate cuts entirely in 2024.