RENEWABLES: German Morning Renewable Forecast

The debate between Vice President and Democratic nominee Kamala Harris and Republican candidate former President Donald Trump did not deliver any knockout blows or election-defining moments. What this debate did do was move the needle of the election in Harris' direction after a period in which the finely balanced election contest had been shifting back to Trump. We will have a full review of the debate in our US Daily Brief to be published later today.

• For the most part, it was Harris who was able to put Trump on the defensive. Trump sought to label Harris as weak on immigration, a major issue but digressed into stories of immigrants eating people's pets. On the economy, Trump also failed to deliver any significant blows. Harris on the other hand was able to push Trump on the issue of abortion, a major wedge issue in the election.
• The snap CNN poll of debate watchers showed 63% of respondents said Harris won compared to 37% for Trump. Prior to the debate the sample group was split 50-50 in which candidate they expected to win.
• Betting markets showed a reverse in sentiment, with the small advantage built up by trump in recent days erased. Prior to the start of the debate, data from electionbettingodds.com had Trump with a 50.7% implied probability of winning to Harris' 47.6%. Now these numbers stand at 51.8% for Harris and 47.0% for Trump.
• One potentially notable debate event came in the endorsement of Harris by pop star Taylor Swift. The Pennsylvania native's social media reach (283mn Instagram followers) is far greater than either of the campaigns and is especially high among younger women. This cohort is already strongly tilted towards Harris, but the endorsement could assist in boosting voter registrations among her fans who were previously not inclined to vote.

Source: electionbettingodds.com

SFIZ4 spreads through H6 have seen similar moves to Euribor peers, extending to fresh cycle lows.

• The lack of firm commitment to further easing from the BoE and near-term UK inflationary dynamics are limiting the pricing of further BoE cuts through year end (particularly when compared to the ECB and Fed), while markets continue to price a steeper pace of cuts further out the strip (partly due to spill overs stemming from Fed & ECB), resulting in the move lower in spreads. 

Fig. 1: SFIZ4 Spreads

Source: MNI - Market News/Bloomberg

10-year EGB spreads to Bunds are up to 1bp tighter this morning, with European equity futures having moved away from this morning’s lows.

• 70bps continues to provide a floor for the 10-year OAT/Bund spread, with political/fiscal risks still prominent.
• French PM Barnier is yet to form a cabinet, while political support from the far-right RN party is still not guaranteed.
• The BTP/Bund spread is ~1bp tighter at 144bps, with the 10-year BTP yield eyeing the August low at 3.544% (this is after last week’s BBG benchmark roll pushed yields ~10bps higher on the generic ticker).
• Today’s regional calendar is light, leaving focus on the US CPI report this afternoon.