Equities off by nearly 1%
Dollar mildly bid
Nikkei1 -1.50% Dax -0.63%
UST 10Y 0.64
Asia and the EU
GBP Mortgage Approvals 84.7K vs. 71K
North America Open
Equity markets were lower in a post-debate reaction as traders worried that the transition of power in America will not go smoothly given the incredibly acrimonious nature of the debate.
Last night’s first Presidential debate was the most tumultuous in modern history marred by constant interruptions, name-calling, and palpable hatred from both candidates towards one another. American voters have never witnessed a televised Presidential debate that had all the decorum of a high school cafeteria food fight and the immediate near-universal reaction was one of revulsion.
President harangued and interrupted at nearly every turn and at one of the lowest points in the debate refused to condemn white supremacists confirming the worst fears of this critics that he is essentially a racist.
Joe Biden for his part seemed exasperated by the constant interruptions and the stress of the moment triggered slight hints of his stutter which he so tightly keeps under wraps. Overall, Mr. Biden certainly beat the low expectations set of him and in nearly every poll came out the winner if for no other reason than he was far more civil than the President, but he did not score any knockout punches, and the general feeling of the audience post-debate was one of distaste with almost everyone agreeing that they witnessed a verbal brawl rather than any attempt to discuss policy.
There were no minds changed last night and that fact actually helped Joe Biden who leads nationally and in almost every battleground state by a margin of 5% to 7%. If the goal of Trump’s campaign was to broaden his coalition by appealing to moderate suburbanites especially women then he failed miserably. Mr. Biden for his part tried to reach out to white working-class males but it is unclear if he made any headway in that goal.
As the debate was coming to a close the markets rallied on the assumption that Biden lead would essentially remain in place but then tumbled sharply when it became clear that President Trump would not concede the election regardless of the outcome stoking fears of a long drawn out legal battle and perhaps even violence if the Constitution will be challenged by Trump. The wanton disregard for the rule of law was the key catalyst for the market tumble and the political risks could weigh on equities unless the economic data at the end of the week surprises to the upside taking the focus away from election risks. For now, the markets remain unsettled but still hopeful that the election campaign will resolve smoothly and whoever wins will enact a large dose of stimulus needed to propel the economy further.