​The US election campaign is moving fast. Trump is leading the polls, although the race is likely to be very close. After the assassination attempt on Trump, the Republicans moved their conference forward and declared Trump as their nominee with Vance as his vice-presidential candidate. Trump has been the clear Republican nominee since relatively early in the primaries, when he won most of the votes. On the Democratic side, things have also been complicated. Initially, Biden seemed to have the nomination wrapped up, but this was gradually called into question. Since the Biden-Trump televised debate, voices around Biden's state have grown louder, leading to Biden's decision to withdraw from the race and endorse Harris as the Democratic presidential nominee. Harris kicked off her candidacy with a strong speech. Although Harris does not yet have the Democratic nomination, it is likely that she will soon be announced as the official Democratic candidate. Her late entry into the race certainly complicates the situation, but the polls do not seem to have changed much from when Biden was the Democratic frontrunner. A more detailed comparison of the two candidates' agendas, along with more debates, will provide more details. Trump is currently leading, but the election will be close.
Meanwhile, equity markets have also been on the move. In recent weeks, equity markets have mostly fallen. Increasingly high valuations of technology companies led to concerns and triggered several sell-offs in recent days. This was exacerbated by poor financial results from Alphabet and Tesla. Since 10 July 2024, the Magnificent 7 have lost more than 10%, wiping out $1.7tn in value in a matter of weeks. Figure 1 shows the fall of the Magnificent 7 alongside other major US indices, which also fell, but by a much smaller amount. The results of Apple and Microsoft in the coming weeks will be crucial in determining whether the current slide can be halted or accelerated. The S&P 500 and Nasdaq also fell significantly, again largely driven by the Magnificent 7 and other tech-oriented companies in the indices. The Dow Jones managed to limit the fall significantly, as part of the recent decline has been a shift from riskier tech stocks to more quality oriented companies.

​Inflation and interest rates were key issues as central banks flooded the world economy with capital to combat the adverse effects of Covid-19. Inflation began to rise rapidly, reaching levels not seen for a long time. In the US, inflation rose to 9% by the summer of 2022. As inflation rose, the Federal Reserve began to raise interest rates aggressively in early 2022. When inflation peaked in the summer of 2022, it started to fall, reaching manageable levels of 3%-4% in the spring of 2023. So far, inflation has not really fallen below these levels. Interest rates were raised to 5.25%-5.5% by the summer of 2023. At the time, investors were expecting significant rate cuts in 2024, as inflation had fallen significantly and central bank measures typically have a significant time lag before they take effect. Investors were also more optimistic about rate cuts as a recession seemed inevitable. To combat a potential crisis, interest rate cuts could have mitigated the expected recession. Despite many common indicators, a recession has not (yet) materialised, even with geopolitical tensions around the globe. In addition, inflation has proved to be very sticky, which has prevented the Federal Reserve from lowering interest rates so far. Looking ahead to H2 2024, inflation is likely to remain at similar levels, with a slight tendency towards the 2% mark. Inflation could spike again if geopolitical tensions and the current wars escalate significantly. Currently, interest rates are expected to be lowered two times by 25bps by the end of 2024, which would bring the target rate to 4.75%-5%. Further cuts are unlikely and would only occur if inflation were to fall very soon and remain at these levels or fall further. No cuts or even hikes cannot be ruled out either, especially if inflation were to pick up again. Figure 1 shows the development of inflation and interest rates in the US since January 2022.