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U.S. 2024 presidential election preview: Trump faces new adversary

KEY POINTS
President Joe Biden ended his bid for re-election and endorsed Vice President Kamala Harris. The outlook for Harris is more uncertain, but on balance, we consider a Trump victory in November the most likely.
Trump would likely focus on tariffs, tax cuts, migration, and deregulation. His win could also raise concerns around geopolitics – all of which would mean growth headwinds.
Harris would likely adopt Biden’s blueprint to focus on partial tax cut extensions and deficit reduction with a milder migration clampdown. An opposition-led Senate would likely impede the passage of such an agenda.
The Federal Reserve would likely ease policy less under Trump and may implement a softer regulatory regime.
Trump’s agenda would likely boost the dollar and yields in the short-term but is ambiguous to risk assets. Further ahead, it suggests a weaker dollar, bonds, and risk assets.

Former President Donald Trump had been enjoying a lead in the polls, albeit a small one for many months. However, his lead increased after June’s televised debate raised further concerns about President Joe Biden’s fitness for re-election. After weeks of soul-searching, President Biden announced he would not stand for re-election and endorsed Vice President Kamala Harris. This was no coronation, but with Democrat heavyweights quickly joining in to also endorse Harris, Democrat hopes to avoid a messy selection seem to have been met, with Harris the likely nominee. Polls conducted immediately after showed Harris doing slightly better than Biden – even leading Trump in one poll. But we are cautious of whether such early polling will persist and on balance consider the likelihood of Trump regaining office as most likely, while acknowledging that Harris’ entry makes this less certain. 

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