GLOBAL NEWS AND EVENTS

Joe Biden exits US presidential race

  • Shunil Roy-Chaudhuri, Personal Finance and Investment Writer
  • 22 July 2024
  • 3 mins reading time

Current Democrat US president Joe Biden has dropped out of the race for the November US Presidential election. In a letter posted on social media on 21 July he wrote: ‘I believe it is in the best interest of my party and my country for me to stand down and to focus solely on fulfilling my duties as President for the remainder of my term.’

Biden’s withdrawal follows on from a poor televised debate with former US president and Republican nominee Donald Trump and from the failed assassination attempt on Trump. These two events have seen the Republican rise above Biden in opinion polls (1).

Biden has thrown his support behind current US vice president Kamala Harris as presidential nominee, but this nomination won’t be decided until the Democratic National Convention in August. Harris has also received support from former Democrat president Bill Clinton and former Democrat Secretary of State and presidential candidate Hillary Clinton, as well as from key Democrat donors.

Other Democrat politicians could enter the race for the presidential nomination. But this would risk a costly battle only months ahead of the election, which may act as a disincentive for any such moves.

Impact on US government bonds

At this stage it is hard to draw firm economic or investment conclusions from Biden’s withdrawal. Even so, the prices of US government bonds with long expiry dates had, prior to Biden quitting, recently fallen relative to those with short expiry dates. This was due to investor expectations that any anticipated Trump policies of low taxation and high trade tariffs could lead to higher inflation.

When investors expect inflation to rise in the future, then they often also expect interest rates to rise in the future. This recently led the current prices of bonds with longer expiry dates to fall, but such pricing could potentially reverse if investors think a Democrat victory could be increasingly likely (2).

We will keep a close eye on US political developments and how they might affect the global economy and your investments. But, in the end, one of our key principles is to invest for the long term, which can potentially enable you to outlast the ups and downs markets inevitably undergo.

Sources:

(1) Financial Times (www.ft.com), ‘Joe Biden drops out of US election and endorses Kamala Harris’, 22 July 2024.

(2) Financial Times (www.ft.com), ‘Markets reassess “Trump trades” after Biden withdraws’, 22 July 2024.

Important information

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