With two weeks to go until election day, Donald Trump has opened a meaningful lead over Kamala Harris in betting markets, although the latest polling suggests the race remains too close to call. To recap, we suspect Trump’s proposed curbs on immigration and new tariffs would be stagflationary. Given the risk of an adverse reaction in bond markets, we are not convinced that Trump would push hard for another large package of deficit-financed tax cuts. A Harris victory would have no impact on our economic forecasts, except in the unlikely event that the Democrats also win complete control of Congress, which would boost the odds of a modest fiscal stimulus.
Note: We’ll be discussing the US election and its economic and financial market implications in a Drop-In on Tuesday, 22nd October at 1000 ET/1500 BST. Register here for the 20-minute online briefing.
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