A survey conducted by Standard Chartered Bank among its clients finds that a “small” Democratic House win is “well priced in” to markets ahead of the poll next month.
“A Democratic win was associated with weaker equities, lower bond yields and weaker DXY, with a stronger Democratic win exacerbating the moves,” the bank says in a release detailing the results. “A Republican win was associated with stronger equities, higher bond yields and a somewhat stronger DXY.”
The survey asked how markets might respond to four House outcomes: (1) Republicans keep the House, (2) Democrats gain a small majority – 218-227 seats, (3) Democrats gain a moderate majority – 228-245 seats, and (4) a ‘big blue wave’ Democrat win occurs – more than 246 seats.
The bank says it received more than 80 responses. About one-third were from Standard Chartered colleagues, 35% from hedge fund clients, and the remainder roughly evenly divided between real money clients, corporates and others. Geographically, just over 40% of respondents came from the US, 30% from Asia, 20% from Europe, and the remainder from the rest of the world.
It stresses that the survey was not intended to rigorously represent the views of financial market participants as “no self-selected survey can be trusted to be a representative sample”, however it does say, “We hope that the detailed responses we received are indicative of thinking among financial-market participants. By and large, Standard Chartered (SC) and client respondents held similar views, but we split the client responses out from the total to reduce any SC skew.”