With record-breaking viewership, a historically high percentage of undecided voters and a razor-thin margin in many national polls, the stakes were undoubtedly high for both candidates in last night’s presidential debate, the first of three in the lead-up to 8 November. Democratic nominee Hillary Clinton arguably did what she needed to do last night: She was prepared, articulate and able to highlight the depth and breadth of her policy expertise. What’s more, she largely avoided some of the thorniest issues that have plagued her on the campaign trail. On the other hand, while Republican nominee Donald Trump avoided any major gaffes and hit Clinton hard on trade-related issues at the start of the debate, he was on the defensive for much of the remainder and seemed out of his depth on several key policy issues.
The big question is, Will any of this matter? Historically, there have been just a few game-changing presidential debates that have altered the trajectory of the race (e.g., the Reagan versus Carter debate in 1980 and the Gore versus Bush debate in 2000). Last night’s was unlikely decisive enough to make that short list. Initial indications in the market seem to suggest Clinton “won” the debate and confirmed her front-runner status: Risk assets, including the Mexican peso – a currency that arguably would not do well under a Trump presidency – rallied after the debate.
But while market observers may seem sure of the victor last night, the most salient question is whether the electorate was convinced. Was Clinton able to galvanize her base, especially non-white and younger voters, while also picking up some of the large pool of undecided voters, including suburban married women in crucial states like Pennsylvania? Did Donald Trump effectively argue that he has the right temperament and policy knowledge to ascend to the White House, and by doing so, ingratiate himself with moderate Republicans and independent holdouts in critical states such as Ohio? For answers, we will likely have to wait a few days for the release of high-quality state polling.
And of course, last night’s debate was only the first of three, so two major inflection points – from both voters’ and the markets’ perspective – are still ahead.
Libby Cantrill is PIMCO’s head of public policy and a regular contributor to the PIMCO Blog.