Biden Bids Farewell

Hello and welcome back. Things don’t always go to plan. Whether that be a howler of a British summer, IT systems failing worldwide or the race for the Whitehouse. As Joe Biden announces he won’t run for re-election, which some will see as a sign of failure, thousands of businesses and institutions are still recovering from the IT failures of Friday.

Now that the Crowd Strike issues have largely been resolved it’s probably the time to see the funny side. Amidst the stream of memes and anecdotes, Channel 5’s auto-cue failure on their show The Project, moments after mocking the situation, left their presenter stumbling for words and us with a smile due to the irony.

The script (or auto-cue) written for Joe Biden to win against Donald Trump and win a second term was re-written last night as Biden pulled out and endorsed his Vice President Kamala Harris for the Democratic vote. Early betting odds suggest this makes little difference and Trump will storm to victory (although watch out for Michelle Obama who’s now considered a long shot) but twists and turns such as last nights events will keep the market somewhat guessing. This race was never going to be boring but an assassination attempt and the President pulling out is making it blockbuster viewing.

We did chuckle at Trump’s reaction to the news his rival had pulled out of the race as he affectionately referred to him as ‘the worst president in American history’.

Markets have been quiet overnight without notable reaction and this week could extend that theme of consolidation with a Fed blackout, whilst further quickfire political headlines could be unlikely as both parties take a moment to pivot and consider the next stages of the race. Reactions to Friday’s IT outages have been subdued as it appears accepted it was one of a freak event, rather than any type of deliberate or structural threat to global IT infrastructure. That being said, the dollar quietly strengthened throughout most of the Friday session and has maintained its value overnight which is likely to signal some profit taking on positions post notable Greenback weakness in the first half of the week.

GBPUSD now trades in the low 1.29’s, allowed for by a weaker GBP by the end of last week as the UK yield curve began to dip in the front end reflecting the steady CPI and wage inflation data released last week in the UK.

So, the week ahead looks like it could be thin on the economic news front and therefore commentators could remain focused on the US election campaign. Some calls have already emerged, most notably from Trumps running mate JD Vance that the President should immediately vacate the White House. The most likely route from here over the coming days will be the important pledges to Harris from key Democrats and they are already coming thick and fast. In the UK, we would bring your attention to the PMI Surveys due for release on Wednesday which we believe could be an understated influence on the August rate decision debate. Really poor numbers here and some think this could sway the MPC to take action with a 25 basis point cut. As the week builds towards it’s climax we will also keep a close eye on US growth figures due for release on Thursday afternoon.

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Thank you for reading! We'll be back next week with another edition. This edition of Birchstone's Weekly View was written by Jonathan Pryor .