The Market Speaks Out: The Presidential debate goes to Kamala Harris

With the dust settling on the Trump vs Harris Presidential debate, it’s clear that the market saw this debate going to Kamala Harris. If some 28% of Americans wanted to understand more about Harris, well, they’ve probably seen enough to know that she can hold her own and stand toe-to-toe with Trump, and even though she got off to a nervous start, Harris ultimately affected Trump’s ability to execute the strategy his team would have implemented.

This debate was never going to be an exercise in digging deep into the weeds and into the granularity of the respective policies, and we’re certainly not significantly wiser on that front. However, the undecided voters wanted to see how presidential Harris appeared and sounded and if she could be the strong leader that is needed for the position in question. I won’t give a view on the outcome of that question, as I don’t have a dog in this fight, but the wash-up is the prediction markets and betting exchanges have seen Harris’s odds of becoming President moving up 2 to 3ppt and now have her slightly favoured. Taylor Swift's endorsement of Harris is certainly not going to harm her chances in any capacity and would have possibly played a small role in the $45m in donations offered to the Harris campaign on the day – the third highest in the election cycle.

The markets will now look for changes and trends in the polling, specifically in the 6 or 7 key battleground states, with Pennsylvania, and its 19 electoral college seats, seen as the deal maker.

'Trump Trades' retreat as prediction markets move in favour of Harris

With the prediction markets offering a loose guide to market players, we’ve seen price action evolve and a reduction in legacy ‘Trump trade’ positioning. Let’s also not forget that if Harris does ultimately get up, the less market-friendly tax hikes are unlikely to pass, as the Senate will highly likely go the way of the Republicans and so passing the more contentious policies will be problematic – that said, Harris is hardly campaigning on fiscal austerity and the Democrats record on the US fiscal deficit is even more extreme than Trump’s – at least in his three years before Covid.

It was this exact time in 2016 and 2020 that both Clinton and Biden started to pull away in the national polls, so we look to see if history repeats this time around. Market players are well versed enough to know that what matters when looking at the polling is how the voting plays into the electoral college voting system.

Looking at the timeline of future events, and while both candidates spend time on the campaign trail, one questions the likelihood of a second debate, as the Harris camp will be happy with the outcome and may refrain from going toe-to-toe again. So, we look to the VP debate between Walz and Vance on 1 October – again, this is unlikely to be a market mover, but given neither really hold back in their views, it could make interesting viewing.