- Macro Strategist
United States, Institutional
Change
The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Last week’s Republican National Convention (RNC) offered little new information about the Republican platform or what a second term for former President Trump might look like. Instead, much of the week’s news was focused on what would happen with President Biden. This question was answered on Sunday (21 July) when Biden withdrew from the race and put forward Vice President Kamala Harris to replace him at the top of the ticket.
What did the RNC mean for investors? In the short term, I think the market will be extremely sensitive to any signs that Trump’s election probability has peaked. In my view, the new Democratic ticket, at least in the short term, could provide that uncertainty, even though the Democrats continue to face fundamental headwinds.
For the bond market, the election remains a critical catalyst given the contrast between both parties as it relates to supply side policies such as trade and immigration, in addition to policy differences around taxation and regulation. A higher probability of divided government could lead to lower yields as markets focus on higher taxes in 2026, compared to a Republican sweep scenario, which would have the opposite effect. My cyclical research continues to suggest lower 10-year Treasury yields, while my structural work continues to imply much higher yields are necessary over time.
Where do we go from here? In my view, there are both benefits and costs of Harris’ new place at the top of the Democrat’s ticket. On the upside, she could reduce concerns from the Democratic base around fitness for office. And, while Trump leads all Democrats with respect to the economy, immigration, and foreign policy, the Democrats retain an edge on reproductive rights. This was the single most important factor driving the Democrats’ success in all special elections and the midterms post the Dobbs decision. Harris could be a much more vocal and effective proponent of reproductive rights. Elevating this issue is necessary, but possibly not sufficient, for Democrats to improve their electoral prospects. Current polls that incorporate Trump versus Harris show Harris trailing Trump in key swing states, but by 1 – 2 percentage points less than Biden did. A new Democratic slate also could help close the enthusiasm gap — which currently favors Trump nearly 2:1 — and, relatedly, shore up support among 18- to 29-year-old voters where the Biden/Harris combo had been running around 20 points behind their 2020 results.
On the downside, Harris has proven to be a less appealing candidate for national office, with a relatively limited track record as both senator and vice president. Furthermore, since Biden stepped down from a position of weakness, not strength, Harris could be associated with this failing. Once the dust settles, the underlying issues of inflation and immigration will still likely linger for the Democrats. Before the debate, inflation and immigration were largely driving Trump’s persistent polling advantage. The next big step for the Democrats will be choosing a running made for Harris. With many possibilities in play, the math of the electoral college will likely weigh heavily in this selection.
The last month has gone favorably for Trump. His odds of winning have moved up sharply. It clearly isn’t a surprise to the market anymore either. Therefore, it’s worth thinking about what, if anything, in the short term could reverse that. We will be watching closely whether Harris’ new place at the top of the ticket and the selection of her running mate could do that.
Stay up to date with the latest market insights and our point of view.
Showing
of
Insights Posts
Fed delivers rate cut, but hawkish 2025 guidance sends yields up
Fixed Income Analyst Caroline Casavant examines the outcome of the December 18 Federal Open Market Committee meeting and the implications for rates, inflation, and real growth.
3
min
Article
2025-06-30
Weekly Market Update
What do you need to know about the markets this week? Tune in to Paul Skinner's weekly market update for the lowdown on where the markets are and what investors should keep their eye on this week.
4
min
Video
2025-12-31
Bond Market Outlook
Our fixed income experts assess how to capitalize on market volatility with a flexible and dynamic approach that leverages diverse high-yielding opportunities and manages risks carefully.
2025-12-31
Going their separate ways: Capitalizing on bond divergence
Our fixed income experts discuss how to position portfolios for a world of uncertainty and divergence, exploring key themes and evolving bond opportunities for 2025.
7
min
Article
2025-12-31
Securitized credit: Opportunity amid tight corporate spreads?
Portfolio Managers Rob Burn and Cory Perry discuss why they believe securitized credit has an attractive role to play in today’s tight-spread environment and highlight potential areas of opportunity in 2025.
5
min
Article
2025-12-31
Scaling opportunities in a new economic era
Explore our latest views on risks and opportunities across the global capital markets.
Article
2025-12-31
The credit cycle has been extended — but what’s next?
Credit experts Derek Hynes, Joe Ramos and Will Prentis discuss why they believe the current credit cycle still has legs and explore likely implications for credit portfolios in 2025.
5
min
Article
2025-12-31
High-yield credit investing: it’s a marathon, not a sprint
Fixed Income Portfolio Manager Konstantin Leidman explains his focus on the high-quality companies likely to outperform over the long term and why he is wary of the hype surrounding potentially bubble-inducing developments like generative AI.
5
min
Article
2026-01-01
What's current in credit: November 2024
Connor Fitzgerald explores the impact of President Trump’s US election victory on credit markets. Where are the opportunities and risks for credit investors now?
4
min
Video
2025-12-31
Navigating uncertain policy shifts
Macro Strategist Juhi Dhawan explains why investors should prepare for heightened volatility in 2025, due to significant policy changes under President-elect Trump that will impact inflation, trade, and economic growth.
8
min
Article
2025-11-30
Listening to voters’ economic concerns should mean less fiscal spending
Fixed Income Portfolio Manager Brij Khurana explains the likely economic and market impacts of Trump administration policies, including potential winners and losers from drastic fiscal spending cuts.
6
min
Article
2025-11-30
URL References
Related Insights