Key Points:

•  Bernie Sanders and Donald Trump successfully focussed on the problems that globalisation raised for US middle class jobs and pay, providing a difficult backdrop for any candidate promoting policies like free trade or fiscal austerity where there could be clearly defined losers among blue collar and middle class voters. Instead the focus has been on tax cuts for most, the maintenance of health and welfare spending programmes and reduced immigration.

• Polls suggest a win for Mrs Clinton although the outcome remains unclear due to uncertainty around turnout and voter reluctance to reveal their voting intentions to pollsters. Reluctance to compromise, politicisation across many areas of economic policy and the political risk of shifting from pre-election positions suggests that there could be continued grid-lock in US policy unless one party controls both the Presidency and the Congress.

• For markets, a surprise Trump victory would create volatility but we expect the US dollar to strengthen whoever wins. We do not expect the US election outcome to be a game changer for bonds but the emphasis on more government spending by both candidates suggests a shift away from monetary stimulus towards fiscal policy. This would help sustain the trend to higher yields and a steeper yield curve in US financial markets.

 For further details, please see the attached document:

• US Presidential Election November 2016 (PDF, 5mb)