Thu, May 06, 2021 @ 01:39 GMT
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US Election Monitor #1: Divided Congress Still Most Likely Outcome With One Month to Go

Election day on 6 November is drawing closer. In August and September, the generic ballot polls moved in favour of the Democrats - from 47.6% at the beginning of August, to 49.0% at the time of writing. Still, according to FiveThirtyEight, the probability of the Democrats winning control of...

Democrats Might Regain Control of House, And Then?

Opinion polls suggest that the upcoming US midterm elections, scheduled on November 6, would lead to a split Congress – Democrat regaining control of the House and Republic retaining majority of the Senate. Such outcome could lead to political gridlock and more vigilant oversight of Trump’s administration. Yet, the...

How Will the US Mid-Term Elections Impact Markets?

Geopolitical risk has been a dominant theme of 2018, with escalating trade tensions, Australia’s Prime Minister getting ousted, traders questioning the independence of Turkey’s institutions, and high-stakes negotiations around NAFTA and Brexit all grabbing headlines at various points this year. With traders focused on these day-to-day developments, arguably the...

Trump is Struggling With Only Two Months to Midterm

Today's key points US midterm election is mostly a political event not an economic event. We expect the market implications to be limited, as Trumponomics is unlikely to be rolled back. In Europe, there are early signs that soft indicators are stabilising, meaning that growth will probably remain at...

Weekly Focus: Will Trump Step Up the Trade War?

Market Movers ahead US President Trump to possibly announce US tariffs on an additional USD200bn of Chinese imports next week. Also CPI data will be released (Thu), where we expect 2.3% Emerging markets will continue to be in focus, in particular the Turkish central bank meeting where we expect...

US Midterm Elections: Mostly a Political Event with Limited Implications for Markets and the Economy

Key takeaways –macro and politics We believe the US midterm election, which takes place on Tuesday 6 November, is mostly a political event, not an economic event. The most likely outcome is that the Democrats win the House but the Republicans retain Senate control. That would make President Donald...

Erdogan is to Blame For Turkish Lira’s Free Fall

While US sanctions against Turkey have dominated news headlines, recent selloff of Turkish lira is a vote of dissent to the policy of the new government. After his “re-election”, President Tayyip Erdogan has grabbed tighter control of the economic and monetary policies. However, the policies implemented have failed to...

After Historic Election, Mexico’s Future Still Depends on Trade and Fed

Andres Manual Lopex Obrador (a.k.a. AMLO), leader of the leftist National Regeneration Movemen (MORENA), won the presidency with landslide victory at Mexico’s general election held last Sunday. Gaining 53% of the vote, his support is far higher than his major competitor Ricardo Anaya (22.5%) of the National Action Party....

Prolonged Political Uncertainty in Italy Sparks Fear of Financial Market Contagion to Neighbors

(Updated on 0230 GMT, May 30) 10-year Italy-Germany yield spread jumped further to 2.83%, highest since 2013, on May 29. Hopes of forming a populist coalition government in Italy hit the rocks as President Sergio Mattarella rejected eurosceptic Paolo Savona’s nomination as the next finance minister. Yet, he has invited...

Kiwi Slides Amid Political Uncertainty as Parties Haggle Out Coalition Deal

The New Zealand dollar has slid by almost 2% over the past two days as an inconclusive election result has opened the prospect of weeks of uncertainty as the main political parties attempt to form a coalition government. Saturday's general election failed to give the ruling National Party the majority they were hoping for, instead losing three seats in the preliminary results, while the Labour opposition party gained 13 seats, leaving the New Zealand First party holding the balance of power.

Euro, Kiwi Setback As Election Winners Seek Coalition, Gold Down Despite Another Round Of Threats

The euro and the kiwi were trading lower on Monday after the election weekend for Germany and New Zealand ended with expected outcomes but insufficient votes to form a government. Meanwhile, geopolitical tensions continued to escalate between the US and North Korea as another round of threats took place during the weekend. However, the markets ignored the fresh warnings, with the safe-haven gold retreating near to one-month lows.

Forex: German & New Zealand Elections, Japan Next?

The results of the German Election have re-elected Chancellor Angela Merkel for a fourth term. Her CDU party won fewer votes than was expected and Chancellor Merkel commented that 'the CDU would have hoped for better result, but we mustn't forget – looking back at an extraordinary challenge – that we nevertheless achieved our strategic objectives: we are the strongest party. We have mandate to form the new government and we will form the new government.' Chancellor Merkel will now be tasked with forming a coalition Government which is likely to take several months. Per the latest results the CDU won 32.5% of the vote compared to the 2013 election that saw them win 41.5%. The normally strong SPD's 20% of the vote is a post war low for the party, whilst the right-wing nationalist AfD party, appears to have won 13.5% of the vote, making it the country's third largest party. With the AfD securing third place this may cause concerns, as it may disrupt Merkel's plans for further Eurozone integration.

New Zealand General Election: Economics Clouded By Politics

While the final result would be formally announced on October 7 (due to the complex arithmetic of the mixed-member proportion system), the available information confirmed that the centre-right National Party remains the biggest party but would again be shy of being a majority government. Worse still, it would also be challenging for Nationals to form a minority government with consent of smaller parities. While many believe that the most likely result would be a Nationals+ NZ First coalition, it is not yet a done deal as it is still possible for NZ First form a coalition government with centre-left Labors and left-wing Greens. With plenty of uncertainties remains and the populist NZ First likely be a kingmaker in this term, New Zealand dollar got hit, losing over -1% against US dollar and Australian dollar.

New Zealand Election: Change in Government is NZD-Negative in Near-Term

The upcoming New Zealand election would be a tight race between the incumbent National Party and Labor Party. Polls of polls compiled by both RNZ and Stuff indicate that supports for both parties are at around 40%. Moreover, opinion polls have been suggesting that neither of the parties would be able to a government without forming coalition with smaller parties. This is such uncertainty that has increased the volatility of New Zealand dollar of late. This report compares the impacts of various scenarios on the economic growth outlook and the monetary policy, hence the exchange rate. We believe that maintain the status quo - a minority government led by Nationals- would be the most NZD-favorable, while a Labor + Green+ NZ First trio would lead to an immediate, but short-term selloff in the currency.