Daily Commentary BY THE CURVE TEAM –

US Presidential Race Heats Up

30th of September, 2020

The first of three debates between democratic nominee Joe Biden and incumbent Donald Trump will occur today.

The winner of the presidential election on November 3 will have consequences for the global economy. Donald Trump would maintain low corporate tax rates and is considered laxer on business regulation. He also has a more overtly hard-line stance on China in terms of trade and foreign policy.

Biden on the other hand has made his intent on raising corporate tax levels clear and is deemed more likely to crack down on big businesses with regulation. His China policy is less forthright than Trump’s but considered more relaxed.

These business and trade environments will be the primary influences on economics and markets from the presidential election result. Biden is currently the favourite to win the race to office but the TV debates often move the polls.

As the probabilities of a Trump or Biden election win change, so will the prospects for the business and trade environment in the US, which will have knock on effects for Australia. A caveat to this is should either party only win either the house or congress then this will limit the ability of either party to implement policies.

Unrelated to US politics was a fall of oil prices of around 4% overnight. Concerns of demand not reaching pre-Covid levels until two year times prompted the falls.

Sustained low oil prices will make central banks inflation targets even more difficult to reach.
The cause of the low prices- a lack of demand- will make this even more difficult as there will be sustained disinflationary pressures.

Today credit data and building approvals for August will be released. Credit data has fallen for three consecutive months so any recovery will be looked for, as will refinancing activity with fixed interest loans at record low levels. The discrepancy between Victoria and the rest of the country for building approvals will be the main point of interest for the building approvals data.

Josh Stewart

Client Relationship Manager