Markets will be fixed on the upcoming US Presidential debate in Cleveland, Ohio on Tuesday where President Trump and former VP Joe Biden will square off for the first of three debates over the next month. The candidates have already agreed on the format of Tuesday’s debate with topics ranging from the Supreme Court to election integrity. But it is questions on the economy that are likely to dominate and will be of most interest to financial markets.
There is no doubt American’s are still hurting from the COVID crisis. The country is the worst affected globally both in terms of the number of cases and deaths according to data from Johns Hopkins University. A recent research report from The Pew Research Center shows economic fallout from COVID-19 continues to hit lower-income Americans the hardest. These are the type of swing voters who may vote for Biden this time around should he successfully present a credible plan to improve their economic and job situation.
In the meantime, the US stock market continues to march higher. The S&P 500 is up just over 2.1% in 2020 but pails compared to the Nasdaq 100, which is up nearly 22% in the same period as tech undergoes a real and sustainable bull market. Presidential messaging will be important in this first debate. Markets will be looking out for policy signals such as changing tax rates or other government fiscal measures to get clues about what to expect in the next four years. Wednesday could be one of increased market volatility, depending on what comes out of Ohio on Tuesday night.
US Macro Data This Week
This week the market also gets two critical pieces of economic data. On Thursday, the Bureau of Economic Analysis releases Personal Income and Spending for August. The market will be paying particular attention to Personal Income because this is a political issue that could influence the course of the US Presidential election. The current consensus for August is a decrease in personal income of 2.2% after an increase of 0.4% in July. A number worse than expected would provide additional political capital to the Democrats looking to show that people are worse off under a Trump administration.
On Friday comes the all-important US Non-Farm Payrolls figure for the month of September. The consensus is for another significant increase of 920,000 jobs after a rise of 1,371,000 in July as the US jobs market slowly begins to heal from the devastation wrought by COVID-19. An increase in employment of less than 1 million would be the first time in the last four months that the figure dipped this low. April was a particularly devastating month, however, with 20.8 million jobs lost. Since then, roughly half of those jobs have been restored, but a higher than expected figure in September will be a boost for the Trump campaign that is eager to show the US economy is healing.