By Benjamin Picton, senior macro strategist at Rabobank

The Shot Heard Around the World

The US presidential campaign was upended over the weekend by an attempted assassination of presumptive Republican nominee Donald Trump. Trump was speaking at a campaign rally in Butler, Pennsylvania when a shooter opened fire from a nearby rooftop. A bullet grazed the 45th President’s ear, drawing blood before he dropped to the ground and was surrounded by members of the Secret Service. Before being escorted off stage, Trump stood and defiantly punched the air, producing what is sure to be the defining image of the campaign.

The shooter was killed by Secret Service snipers moments after the assassination attempt. According to media reports, one innocent bystander was killed by the shooter’s stray bullets and two others critically injured. Donald Trump was immediately sent for medical evaluation but is reportedly in good health and issued a statement via Truth Social calling for unity. President Biden addressed the nation from the Oval Office a short time ago, also calling for unity, condemning political violence and urging partisans to “lower the temperature” in US politics.

The assassination attempt comes just days before the Republican National Convention, due to kick-off in Milwaukee today. Donald Trump arrived in the city on Sunday ahead of his presumptive confirmation as the Republican Party’s nominee for the Presidency and keynote address on Thursday. It is widely expected that Trump will unveil his choice of running mate this week, with odds shortening on Ohio Senator J.D Vance ahead of GOP establishment-type candidates like Doug Burgum and Marco Rubio.

Vance is seen as a torchbearer for the MAGA brand of conservative nationalism. His best-selling memoir ‘Hillbilly Elegy’ (later adapted for film by Ron Howard) was widely seen as a guide to the Trump support base, and an explanation of Trump’s ‘America First’ approach to trade and immigration issues. Does Donald Trump’s recent brush with mortality make the selection of a MAGA true believer as VP more likely? There is also the consideration that, if Trump does indeed win, he will not be eligible to run again in 2028 and may therefore be looking to anoint potential successors who will carry on his program.

In one sense, there is a remarkable symmetry between the events of the weekend and the attempted assassination of President Reagan in 1981. At the time of Reagan’s shooting, the ‘Reaganomics’ experiment in Neoliberalism that has been the dominant economic paradigm of the last 40 years was still in its infancy. The attempted assassination of Donald Trump perhaps bookends the Neoliberal years as the world turns again to mercantilist economic nationalism, characterized by protective tariffs and tighter controls on the international mobility of labor and capital.

After Reagan was shot in 1981, he received a substantial poll boost and went on to win the 1984 Presidential race against Carter VP Walter Mondale in one of the all-time electoral drubbings. Mondale won just 13 electoral college votes against Reagan’s 525, carrying only his home state of Minnesota and the District of Columbia.

The Biden campaign will be acutely aware of the historical comparison. Biden had hoped to wrest back some momentum after his disastrous debate performance and subsequent gaffes at last week’s NATO conference saw numerous Democratic politicians and donors express a lack of confidence in the President’s ability to defeat Donald Trump. Bloomberg’s Jordan Fabian suggests that the attempt on Trump’s life deprives the Biden campaign of a favored campaign tactic: making Trump’s behaviour and agenda the central campaign issue.

It will be difficult for President Biden to simultaneously argue for national unity and lowering the temperature of the debate, while also suggesting that Trump’s character and program are a risk to American democracy. The Biden campaign is snookered and will have to run instead on the President’s record in office: a message that has thus far failed to cut through with voters.

Market reaction to the events of the weekend has been reasonably muted. The Bloomberg Dollar Spot index is up minorly on haven buying, crude oil prices are slightly higher and Asian equities are mixed. Aussie 3 and 10-year bond futures have caught a small bid in early trade.

If the assassination attempt improves Donald Trump’s electoral prospects as dramatically as pundits seem to be suggesting, markets may be under-pricing the consequences of universal tariffs and a potential curtailing of Fed independence.

For now, the price action suggests traders remain primarily focused on when the first cut to the Fed Funds rate is going to come, and not on momentous geopolitical recalibrations.