Clinton In The Lead On Home Stretch
With the three Presidential elections debates now firmly in the rear-view mirror, Democratic candidate Clinton has been deemed the standout winner of the events and has cemented her lead in the polls. Ahead of the first debate the race between the two candidates tightened up with Clinton’s lead narrowing from 7.6% in early August to just 0.7% on 18th September and 1.5% on 26th September according to RealClearPolitics’ national polling averages.
Trump had gained momentum in key states such as Florida, North Carolina & Ohio whilst Clinton maintained a slight Electoral College lead. Since then, however, sentiment has moved firmly back in favour of Clinton with FiveThirtyEight polls-plus model giving Clinton an 83% chance of winning the Presidency. However, the percentage of voters who are supporting third parties or are undecided is very high this time increasing uncertainty.
Voter Turnout Concerns
In the context of global figures, the US typically has quite a poor turnout of registered voters. Over an 80 year lookback period, the US’s voter turnout as a percentage of the population (voting age) has fluctuated between a low of 51.5% in 1996 and a high of 64.9% in 196. Looking back over the last four election cycles, turnout has averaged just 57.8%. As of 2012, African-American voters had the highest turnout at 66.2%. On average, younger voters, aged 18 – 29, tend to turn out at a rate of 15 – 20% lower than those voters over 30. Interestingly, despite the dominance of the two-party system, 40% of the electorate (the largest share) identifies themselves as Independent.
Historically, high turnouts in US elections have tended to favour Democrats as the marginal turnout typically comes from minorities and young voters. Early voting, which grew from 10% in 1996 to over 30% in 2012, is legal as long as election officials don’t count the votes until election day. Data thus far indicates that early voting is at record highs and the party affiliations of voters so far show that Clinton could gain more votes in Florida, North Carolina and Virginia than Obama did in 2012.Similarly, Trumps looks like we could do better in Iowa and Ohio than Mitt Romney did in 2012. Moreover, early voting looks to be favouring the Democrats over the Republicans.
Markets appear at ease heading into the elections with the Mexican peso having made a comfortable recovery against the US Dollar retracing 50% of the year to date lows to highs. A Clinton Presidency is seen as positive for the US Dollar and markets in general, ensuring stability.
The extreme policies which Trump has proposed including heavy trade tariffs and immigration restrictions are seen as presenting a high risk of volatility should the Republican candidate win the Presidency, Currencies such as the Chinese Yuan, Mexican Peso and Canadian Dollar are thought to be at risk should Trump win the election. In this scenario, safe haven currencies such as the Japanese Yen, and the Swiss Franc are expected to outperform against their G10 peers.
The comfortable lead that Clinton currently has in the polls creates great risk in the markets should we see a surprise win for Trump. Markets are licking the wounds suffered from the Brexit catastrophe where against poll makers results and betting market odds, Britain voted in favour of leaving the UE causing a seismic shift in currency markets. With most now anticipating a win for Clinton, there is plenty of scope for volatility should the Republican candidate steal the show at the last minute. This risk is again heightened by the amount of voters who are as yet undecided.