Citi says that Trump’s health condition may mean a less closely contested election ahead of the November vote
The firm’s chief FX strategist in Japan, Osamu Takashima, says that Trump’s coronavirus infection may have reduced the chances of a contested election and the risk of a constitutional crisis happening, which has led to a limited reaction in markets so far.
Adding that such an event may even bolster risk sentiment, with recent public opinion polls also indicating that Biden’s support ratings are still above Trump – with a wide enough margin for a probable victory – and that isn’t necessarily a bad thing.
The firm says that Biden is seen as a pragmatist and that his policies may not necessarily be negative for markets.
In the bigger picture, they say that a Biden victory won’t be enough to reverse the “lukewarm” risk-on and dollar weakness theme that has persisted over the last six months.
I reckon it’s still a bit early to draw much conclusions after only a few days of having to digest Trump’s health condition. But yes, if things do keep as it is, it shouldn’t have much impact on how the polls will shape up ahead of voting day.
But again, it’s still hard to say what could happen over the next four weeks. There’s still plenty of time for some major twists and turns along the way.