Oct 15, 2020 - Politics & Policy

Wall Street certainty grows as polls show Biden with sizeable lead

Adapted from Deutsche Bank using Real Clear Politics and Gallup polling data; Chart: Axios Visuals
Adapted from Deutsche Bank using Real Clear Politics and Gallup polling data; Chart: Axios Visuals

The U.S. presidential election is 19 days away and investors are growing increasingly certain of a Joe Biden victory, as the former vice president has maintained and added to his sizable lead over President Trump in national polling and betting odds.

What's happening: Biden's edge recently rose above 10 percentage points, according to polling averages from FiveThirtyEight and Real Clear Politics, an important milestone.

Why it matters: "A Truman style error in the polls may give Mr. Trump a chance given the electoral college system, but the reality is that — unless the polls narrow into election day — a Trump victory would be the biggest error in our modern era of mass polling," Deutsche Bank research strategist Jim Reid says in a note to clients.

  • Investors believe Biden and a Democratic Congress will deliver trillions of dollars of new fiscal stimulus.

What it means: "The largest error was in 1948 when President Truman won by 5% in spite of being behind by 4.4% in the final polls. However, Truman’s challenger in New York Governor Dewey saw his lead fall from 17 points in late September to 9 points in mid-October before settling at ‘only’ 5 points just before the election," Reid says.

  • "The graph compares the final poll or polling averages (since 2004) for each election versus the eventual vote margin."
  • "Polls have been within 0-3% of the final outcome in the last 6 US presidential elections."

The state of play: Polling shows Biden has improved his standing in Wisconsin, North Carolina and Iowa, remains ahead in Florida and has moved to "solidly" ahead in Michigan from "leaning" in recent weeks, TD Securities macro strategist Oscar Munoz says in a note.

Driving the news: The likelihood of a Democratic sweep of the White House, Senate and House of Representatives also looks more likely as Democrats are leading in both Senate races in Georgia with Biden up by 7 points, according to the latest Quinnipiac poll.

  • "Betting odds continue to indicate a Democrat majority in both chambers of Congress, with Dems on track to flip five seats in the Senate, while losing one seat," Munoz says.
  • "Democrats are also expected to add to their majority in the House."
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