A Democratic victory in the presidential poll, and a related takeover of Congress, according to Christopher Wood, global head (equity strategy) at Jefferies, will see pressure from the activist side of the party to embrace more formally policies aligned with Modern Monetary Theory. Such policies, he believes, would turn the US Federal Reserve (US Fed) into an instrument of fiscal policy obliterating any lingering sense of central bank independence.
An ISPOS – Reuters poll done between October 16 – 20, puts the Democratic candidate Joe Biden
ahead of Donald Trump
with 51 per cent acceptance compared to 42 per cent for POTUS.
Meanwhile, analysts at UBS assessed potential risks associated with the current election based on three scenarios. First, Former vice-president Biden is elected with Democrats taking both houses of the Congress. Second, is a status quo where President Trump is re-elected and the Democrats and Republicans retain the House of Representatives and the Senate, respectively. Third, Biden is elected but Democrats and Republicans retain the House of Representatives and the Senate respectively.
UBS believes markets
with greater overseas revenue exposure, especially North Asian exporters, could benefit if the US adopts more multilateral and predictable trade/foreign policy (more likely under Biden). On the monetary front, markets with high yield gaps, low current account balances/deficits, and historical sensitivity to the US bond market, they believe, could benefit in an environment of easier-for-longer monetary policy.
“Stepped up fiscal spending, particularly on infrastructure, would generally favour the materials sectors, to which Australia naturally has the highest exposure. India, Indonesia and Singapore come out positively in two of the three scenarios, without being relatively negatively affected in the third. Both Indonesia and Singapore are also inexpensive versus their history relative to the region,” UBS said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.