U.S. and Global Politics Dominate Headlines

U.S. election in focus. Markets largely spent the day evaluating U.S. political risks after last week’s presidential debate and this morning’s Supreme Court ruling in favor of certain immunities for former President Trump. UST Yields ended the day 0-7 bps higher on the long end of the curve. U.S. equities rallied, with the S&P 500 up ~0.30% and the NASDAQ up ~0.80% on the day. Looking ahead, markets will be focused on this week’s June labor data releases. Overseas, the Euro strengthened after French President Macron’s party was defeated in the first round of snap-elections.

Supreme Court offers Trump immunities. This morning, the Supreme Court voted 6-3 in favor of offering Former President Trump certain immunities from criminal charges for disputing 2020 election results, likely delaying a trial until after the November election. Chief Justice John Roberts wrote, “…Congress may not criminalize the president’s conduct in carrying out the responsibilities of the executive branch under the constitution.” The decision follows last week’s debate that was interpreted as increasing Trump’s odds of re-election. Morgan Stanley strategists Matthew Hornback and Guneet Dhingra wrote in a report, “…higher prospects of a Republican sweep, amid growing focus on deficits, could put upward pressure on long-end term premiums.”

Macron loses in French snap elections. After his party’s defeat in recent European parliament elections, French President Macron dissolved the National Assembly and called snap elections. In the first round of voting, the far-right National Rally party and its allies won ~33% of the vote, while Macron’s moderate group only won ~20%. Left-wing parties won ~28%. The mixed results, with no clear majority, were viewed somewhat positively by markets that anticipate severe market shocks if the far-left or far-right take a majority given their tax and spending plans. The second-round of voting is due July 7th, where a majority could be secured by any of the factions.