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Catalyst Wanted

07 November 2019 by jbchevrel

Positive trade headlines took CDS tighter across the board. As central banks are not expected to deliver any significant change before the end of the year, it is fair to look towards the election calendar. In the UK, the Conservatives are unlikely to not win the majority they need to pass the Boris deal, despite early campaign mistakes. The US side of the Atlantic may then be the interesting one. Although it is nothing near term, we could see US politics playing an increasingly important role in price action, over the coming months. Now that House Democrats are holding an official inquiry into allegations that President Trump pressured Ukrainian President to investigate former VP Joe Biden, public opinion on this matter can be worth following ahead of the 2020 election, although it seems fair to not expect this impeachment procedure to go anywhere. Currently, 48% support impeaching Psdt Trump vs 45%. The peak was 50% to 44% last month, and we were coming from 35% to 60% in early May, shortly after the Mueller report was made public. The polls show that Biden, Warren and Sanders would beat Psdt Trump. Biden is, in the polls, still the favourite of the Democrat primary and is seen as most likely to beat Trump. Indeed, of the six battleground states (Florida n. Carolina Wisconsin Pennsylvania Arizona and Michigan), Biden is seen was winning 4/6 over Psdt Trump vs 3/6 for Sander and only 1/6 for Warren. Off-cycle elections on Tuesday suggested Democrat momentum remains strong following the retaking of the House of Representatives, last year. In state wide and local races across Virginia, Pennsylvania and Kentucky, Democrat candidates generally performed well. With just under a year to go before the 2020 presidential election, Democrats showed strength in suburban areas that will be important for the 2020 race. However, it may be difficult to extrapolate national implications from local races as some local Democrats ran on moderate or conservative platforms (Kentucky). The split of both the House of Representatives (Democrats 233-197) and the Senate (Republicans 53-47) will be important, whoever wins the presidential election next year. The consistency between the 2018 and 2019 election results may partly reflect Psdt Trump’s unwillingness to moderate following the “blue wave” of 2018. It may be also noteworthy that at this point in the 1st term of the previous 4 US presidents who won re-election, approval % generally started to trend upward (Psdts Obama, Clinton, Reagan) or hover close to 50% (Psdt G.W. Bush). Oppositely the approval % for Psdts Carter and H. W. Bush, who lost re-election, moved lower. In the light of this, the fact that Psdt Trump’s approval % (1) didn’t trend higher lately and (2) generally stands in low 40%s may not bode well for Psdt Trump’s re-election (yougov 5-6nov 1k 42% Ipsos 4-5nov 1.1k 40% yougov 4-5nov 1k 41% Rasmussen/Pulse 3-5nov 1.5k 46% yougov 3-4nov 1k 41%).