US election debate generates heat but little light

A noisy but ultimately fruitless debate

The two candidates battling the upcoming United States presidential election finally met on the debating floor last night, and it was not a pretty sight. For those hoping for some complex verbal sparring on points of policy, this event was a disappointment. Indeed, it was a most unedifying display overall, as the moderator struggled to control the candidates, President Donald Trump in particular.

Biden stays calm while Trump turns up the heat

In many ways, this was Joe Biden’s to lose. He had to avoid making any serious gaffes, and come across as a man with a genuine desire to help the American people in a dark hour. He succeeded in this, generally speaking, looking directly at the camera and communicating to the voters. There was no major slip-up and he was able to respond in relatively measured tones.

By contrast, Donald Trump was in combative form. In 2016 he came across as a man who could provide an alternative to a candidate that came right out of Washington DC central casting. This time around he was in a different, and more difficult, position, having been the incumbent for the past four years. It was no longer an option simply to blame the Democrats, especially not with regard to Covid-19. Instead, the president went in swinging, attempting to talk over his opponent throughout the evening and browbeat him into submission.

It is unclear how this strategy really benefits a sitting president that is some seven points behind in national polling. When asked to provide a set of reasons why people should grant him a second term, he instead chose to focus on the potential for challenges to the result, discommoding markets with further hints about not going quietly if the race went against him.

Markets mixed, but likely to remain volatile

In quiet overnight markets, the initial reaction was positive, with US futures moving higher as people settled in to watch a debate that didn’t really move the conversation forward, but then fell with the references to the transition and possible legal challenges. Investors have realised that this is likely to be a messy election, and may well get messier after polling day itself. This is not likely to be conducive to a big risk-on rally, with indices and the dollar remaining volatile for the time being.