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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Political Risk
Consumer Sentiment Sours In May, Warning Sign For Biden
The University of Michigan index of consumer sentiment saw its biggest drop since 2021 in May - dropping to a six-month low - reflecting consumer concerns over inflation and rising prices.
- The Washington Post notes: "The economy, while still remarkably strong, has slowed in recent months as the Federal Reserve tries to get inflation under control. Employers are adding fewer jobs, wage growth has decelerated, and Americans are holding off on big purchases like homes, cars and washing machines."
- Jeffrey Roach, chief economist for LPL Financial said: “For the last couple of years, the economy has been driven by household spending and now people are starting to say, ‘Let’s retrench here. The pressure from inflation has finally started to hit even upper-income households.”
- The shifting sentiment is a warning sign for President Biden as the White House economic message - largely driving by positive data - has failed to resonate with voters facing persistently high prices.
- Celinda Lake, a Democratic pollster, noted the particualr concern of gas prices which have risen by roughly 50 cents per gallon since the start of the year on average: “People tend to know the cost of gas, block by block, and they deeply resent it when gas prices go up right before summer vacation.”
Figure 1: Index of Consumer Sentiment
Source: Washington Post/ University of Michigan
Biden Weakness In Sun Belt Tips Presidential Race Towards Trump
Split Ticket has published a useful analysisof the current state of the presidential race with rating changes reflecting polling giving former president Donald Trump a slight advantage over President Biden.
- Split Ticket: “Polls are now more relevant, given increasing proximity to the election. While the fundamentals of the race, which include the issue landscape, campaign cash levels, and candidate vulnerabilities, continue to favor Joe Biden, polling now gives Donald Trump a slight edge.”
- Split Ticket notes: “…our new ratings reflect current data, which points to a more Republican environment than the one we got in 2020.”
- The analysis identifies several dynamics contributing to the shift towards Trump including a fraying progressive coalition in Sun Belt states – in particular a weakness for Biden amongst Black voters in Georgia and Hispanic voters in Nevada and Arizona.
- Axios notes that top Democrats, including President Biden, are sceptical of the polling shift – adding that, “After Trump's 2016 expectation-defying win, pollsters and strategists made adjustments aimed at better capturing Trump supporters,” an adjustment which some Democrats believe may have led to a bias on the other side of the ledger.
- Senator Raphael Warnock (D-GA) said: "The polls showed that I was down when I entered my race. And polls didn't look that great for Angela Alsobrooks [in the Maryland Democratic Primary] a couple weeks ago."
Figure 1: Presidential Rating Changes, May 2024
Source: Split Ticket
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.