There has been a seismic swing in the polling ahead of this year’s crunch US presidential election (5 November).

The latest polls conducted between 5 and 9 August by the New York Times and Siena College put current Democratic vice-president and presidential hopeful Kamala Harris ahead of former US Republican president Donald Trump.

Significantly Harris is ahead of Trump in three key swing states Wisconsin, Pennsylvania and Michigan giving her and (running mate Tim Walz) a four-percentage point lead – 50% to 46%.

According to a survey conducted by the Financial Times and the university of Michigan Ross School of Business, 42% of voters said they trusted Harris more to handle the economy, compared with 41% who said they trusted Trump.

While Trump’s numbers were unchanged, Harris’ was a seven-percentage point improvement compared to incumbent Joe Biden in July’s poll. Tracking by RealClear Politics of betting averages (up to 12 August) suggest Harris has gone from a near 30% chance of victory on 21 July when Biden exited the race to a 52.7% chance. With Trump moving from a 58.4% to 45.7% chance

Harris and Walz will look to sustain this momentum in the run-up to the imminent Democratic National Convention in Chicago (being held between 19 and 22 August).

In terms of the market impact of these shifting fortunes, investors may hold fire until the polling situation stabilises. If Harris is still at these levels by mid-to-late September then we may see more concerted attempts to price in a Harris administration. A planned televised debate between Harris and Trump on 10 September could also be significant in such a volatile race.

Luca Paolini, chief strategist at Pictet Asset Management sees Harris as a continuity candidate: ‘Her policies are unlikely to differ much from Biden’s, given that she’s second in command in the current administration.’

Paolini draws a contrast with Trump whose ‘political manifesto suggests major changes, some very good for equities (corporate tax cuts), others not so much (trade wars, mass deportations of illegal workers)’.

Given her prominent role in the current Biden administration and the importance of the economy as a driver of voting behaviour, Harris will be hoping recent fears of a US recession prove unfounded and will likely have her fingers crossed for a cut to interest rates at the US Federal Reserve’s meeting on 17/18 September.  

Other significant economic releases in the run-up to election day include the final estimate of second-quarter US GDP on 26 September and the first estimate of third-quarter GDP just days before voters go to the polls on 30 October. 

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