Will Clinton's poll bounce hold?

HILLARY Clinton now leads national polls by 3.8 percentage points, up 1.5 percentage points since the Sept 26 debate.

She also leads in 18 out of 20 post-debate polls in swing states, trailing only in Ohio.

A leading polls-only forecast model gives Clinton a 72 per cent probability (17 percentage point increase), a polls-plus forecast model a 69 per cent probability (14 percentage point increase), and prediction markets a 70 per cent chance, up 8 percentage points.

Perhaps more telling, Clinton's personal favourability numbers have slightly improved, suggesting poll movements are more than noise. Can it last?

We flag the heightened risk of disruptions to the campaign and outcome in this unusual election.

These include a further health scare, major scandal, terrorist attack, game-changing gaffe, or information warfare incident that affects the outcome.

Another possible scenario: due to fragmentation in the race, no candidate gains the 270 Electoral College votes needed to win, taking the choice to the House of Representatives.

Alternatively, disruptions cast doubt on the legitimacy of the final result. Could low levels of trust and high levels of polarisation lead to emerging markets-style political outcomes in a world where political risk is shifting to advanced economies?

The earlier rally in USD/MXN (US dollar to Mexican peso) was the clearest indication that Trump risk was rising, but since the first debate this currency pair has rolled over.

The assumption is that as president, Donald Trump would lead an expansionary fiscal policy.

We continue to regard reform potential as low, and emphasise that the last fiscal stimulus (Tarp) was extremely unpopular with voters.

We maintain our 60 per cent probability of a Clinton victory.

Despite Mrs Clinton's recent gains, there are still five weeks to go. Key challenges for Mrs Clinton include gaining the millennial vote, currently leaning towards third party candidates and inspiring turnout amongst her constituents, with "status quo" voters typically less motivated to turn up at the polls than "change" voters.

The importance of debates is exaggerated, but could they sway undecideds and third party leaners?

The second presidential debate will be on Oct 9. While seeing record-high viewership, the practical impact of debates is usually limited when it comes to voter behaviour.

This time around, with 15-20 per cent saying they are undecided or will vote for a third-party candidate (compared to 12 per cent at this stage in 2012), they could matter more.

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