US President Biden gave up his struggling re-election campaign on Sunday (July 21) under increasing pressure from his Democratic colleagues and supported Vice President Kamala Harris to replace him as the party's candidate, facing Republican candidate Trump in the November election.

The 81 year old Biden said he will continue to serve as president until the end of his term on January 20, 2025, and will address the nation this week. He has not appeared publicly since he was tested positive for COVID-19 last week, and is currently being quarantined at his home in Rehoboth Beach, Delaware.

Biden withdraws from the race at the last minute

Biden wrote on X, "Although I have always intended to seek re-election, I believe that withdrawing from the race and focusing on fulfilling my presidential duties for the remainder of my term is in the best interest of my party and country.

Biden's move has greatly reshaped the White House campaign, with many events shaking the election in the past month, including Biden's disastrous debate performance on June 27, which prompted his Democratic colleagues to urge him to withdraw from the race, the attempted assassination of former President Trump on July 13 at the age of 78, and Trump's appointment of 39 year old hardline Republican Senator Vance as his vice presidential running mate last week.

In polls, Americans generally express dissatisfaction with the rematch between Biden and Trump. If Harris becomes the nominee, this move would represent an unprecedented gamble by the Democratic Party: she would be the first black and Asian woman to run for the White House, a country that has only elected one black president in over two centuries and has never elected a female president.

Jaime Harrison, Chairman of the Democratic National Committee, stated that the American people will soon hear news from the Democratic Party regarding the next steps in the nomination process. This is the first time in over half a century that a current US president has abandoned the party nomination.

According to insiders, Biden changed his mind at the last minute. As of Saturday evening, Biden also told allies that he planned to continue the campaign, but changed his mind on Sunday afternoon.

The anonymous source told the media, "Around 1:45 pm this afternoon, the president told his senior team that he had changed his mind." Biden announced his decision on social media within minutes.

The first incumbent president to give up his re-election nomination after Lyndon B. Johnson

Biden's historic decision was the first incumbent president since President Lyndon B. Johnson during the Vietnam War in March 1968 to give up the party's reelection nomination, leaving less than four months for his successor to campaign.

Biden defeated Trump in 2020 and became the oldest president in American history. In that election, Biden described himself as a bridge to the next generation. Some people believe that this means he will become one term president, a transitional figure who defeats Trump and leads the Democratic Party back to power.

But as people questioned Harris' experience and popularity, he firmly believed that he was the only Democrat who could defeat Trump again, so he turned his gaze to a second term. However, recently his aging problem has become more apparent. His gait became stiff, occasionally experiencing childhood stuttering.

Earlier this year, despite concerns from voters about Biden's age and health, he easily won the Democratic presidential primary with almost no opposition.

His unwavering support for Israel's military operation in Gaza has weakened the support of some members of his party, especially young, more liberal Democrats and voters of color.

Many black voters say that Biden has not done enough for them, and Democrats' enthusiasm for Biden's re-election is generally not high. Even before the debate with Trump, Biden's approval rating lagged behind Trump in some national polls and in the battleground state he must win on November 5th.

Harris will become the first black female presidential candidate of a major political party in American history

If formally nominated, Harris, who is 59 years old, will become the first black female presidential candidate of a major political party in American history. Harris said in a statement, "My goal is to win the nomination. I will do my best to unite the Democratic Party, unite our country, and defeat Trump

Multiple sources have reported that Harris' campaign officials, allies, and supporters have started making phone calls to ensure their support for her nomination before the Democratic National Convention in Chicago on August 19-22.

Over the past week, opposition within the party to Biden's continued campaign has been growing, with 36 congressional Democrats - over one eighth - publicly calling for Biden to withdraw from the race due to concerns about his psychological resilience.

Other well-known Democrats considered potential vice presidential candidates include California Governor Gavin Newsom, Michigan Governor Gretchen Whitmer, Pennsylvania Governor Josh Shapiro, and Kentucky Governor Andy Beshear.

In the statement, they all praised Biden and vowed to fight for the Democratic Party's victory in the November 5th election, but did not specify their aspirations or support Harris to succeed Biden in the race. They are all considered potential successors to Biden and may also be candidates Harris would consider when choosing his running mate.

Trump told CNN on Sunday that he believed defeating Harris would be easier.

It is currently unclear whether other senior Democrats will challenge Harris' party nomination - widely seen as a choice for many party officials - or whether the party itself will choose to open up the nomination range.

Public opinion polls show that Harris' statistics against Trump are not better than Biden's statistics against Trump.

After Trump's assassination on July 13th, a Reuters/Ipsos poll was conducted on July 15-16; In the hypothetical direct confrontation, Harris and Trump both have a support rate of 44%. In the same poll, Trump led Biden with 43% approval rating and 41% approval rating, but considering the polling error rate of 3 percentage points, this 2-point difference does not indicate anything.

Congressional Republicans believe that Biden should resign immediately. This will transfer White House power to Harris, with Republican House Speaker Johnson as the next in line successor.

Before Biden announced his withdrawal, Johnson told CNN on Sunday, "If he doesn't have the ability to run for president, how can he govern the country now? What I mean is, this administration has five months left in its term. This is indeed worrying and a danger to the country

Johnson stated in a separate interview with ABC that the Republican Party may attempt to launch a legal challenge to the Democratic Party's practice of switching candidates.

According to a document submitted to the Federal Election Commission on Saturday (July 20th), as of the end of June, the Biden campaign team had $95 million in hand. Experts in campaign finance law have differing opinions on whether this money can be easily transferred to the Harris led campaign team.

This week's outlook: Pay attention to the PCE price index and political situation in the United States, as well as PMI data from multiple countries

The Federal Reserve's preferred inflation indicator (PCE data), initial purchasing managers' index (PMI) for major economies, second quarter earnings reports for US companies, and the Bank of Canada's interest rate decision will drive this week's financial market trend.

After President Biden abandons his re-election bid on Sunday, investors will continue to closely monitor the political situation in the United States.

As the Federal Reserve enters a quiet period before its meeting on July 30-31, speeches from major central banks will become more subdued, and global data arrangements will be relatively limited.

The highlight for the United States will be the release of the Core Personal Consumption Expenditures (PCE) Price Index on Friday, and given the improvement in inflation trends, the Federal Reserve will be "closer" to cutting interest rates. Other released data include: existing home sales, initial S&P global PMI for July, trade data and new home sales, durable goods orders and initial Q2 gross domestic product (GDP), personal spending, and final University of Michigan consumer confidence and inflation expectations for July.

The main data for Europe include the Eurozone July Consumer Confidence Index and PMI, German retail sales, and Ifo survey. The only important data for the UK is the initial July PMI.

Japan will release the initial PMI and Tokyo Consumer Price Index for July.

The Bank of Canada will hold a meeting on Wednesday. After the slower than expected rise in consumer prices in June, the market expects a 92% chance of a 25 basis point rate cut.