S&P 500 and Yields Decline After Selzer’s Iowa Poll Resets Election Odds

Also, 10-year T-note, gold, crude oil and Japanese yen futures

1. S&P 500 E-mini futures (/ES): -0.11% 
2. 10-year T-note futures (/ZN): +0.53% 
3. Gold futures (/GC): +0.12% 
4. Crude oil futures (/CL): +2.58% 
5. Japanese yen futures (/6J): +0.78% 

A shocking poll that came out over the weekend has reset expectations for the 2024 U.S. elections. Ann Selzer, arguably one of the best pollsters nationwide, showed a 3-point lead for Kamala Harris in Iowa, a state long-dismissed as potentially in play. Political betting markets, which may have been the “tail wagging the dog” over the past month, closed the gap between Donald Trump and Harris over the weekend, with Kalshi flipping at one point. The “Trump trade” on a macro level is being unwound today as a result: Stocks are weaker, yields are lower and the U.S. dollar is down across the board.  

By polling standards or betting market standards, this is going to be a close race. Be sure to join us tomorrow at 7 p.m. EST for tastylive’s Unspecial: Election 2024. 

S&P 500 futures (/ESZ4) were nearly unchanged ahead of the New York open after trimming earlier gains. Nvidia (NVDA) rose nearly 2% in pre-market trading after S&P Global announced the chipmaker will replace Intel (INTC) on the Dow Jones Industrial Average. Sherwin-Williams (SHW) will also join the Dow, which pushed its stock up over 5% ahead of the opening bell. Meanwhile, traders have their eyes on tomorrow’s U.S. election, with Harris gaining a slight advantage in the last round of polls.

Treasury yields fell across the curve to start the week as traders price in rising odds for a Harris win. Markets see Harris as slightly better for the bond market on expectations she won’t grow the deficit as much as her opponent would. That would likely result in a less favorable environment for inflation. The 10-year T-note contract was up 0.51% this morning following a decline on Friday that brought the contract’s price to the lowest since early July. 

Silver prices (/SIZ4) gained today as a softer dollar cleared some upside for the metal. A Harris win could potentially support silver by reducing the chances for a trade war with Beijing. Meanwhile, China has failed to lay out a clear plan for stimulus efforts, with policymakers likely waiting to see how the U.S. election turns out. Beijing would likely have to support more measures to spur internal demand for manufacturing should Trump win. Later this week, we’ll also see several potentially high-impact economic prints out of China, including house prices and retail sales. 

Crude oil prices (/CLZ4) started the week higher after OPEC+ agreed to push back a planned production increase starting in December by one month. A rise in non-OPEC supply along with weak demand in China has pushed prices lower recently, prompting the move from the cartel. OPEC likely wants to see the results of the U.S. election before making its next move. Meanwhile, geopolitical concerns are on the rise as intelligence officials increasingly suspect Iran is planning another attack on Israel. A trump win would likely support a high-intensity campaign for Israel against Iran because the administration would likely offer more support for attacking critical Iranian infrastructure. 

Japanese yen futures (/6JZ4) rose on today as traders priced in better odds for a Harris win, which would likely leave the yield differential between the United States and Japan at a more sustainable level, thus allowing Japan more room to maneuver policy. Liquidity in the currency should be on the light side today, given that Japanese markets are closed on today for a holiday.  

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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