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Important stories about money and politics in the race for the White House
The dollar fell and U.S. Treasuries rose on Monday as global markets sharply reduced bets on Republican candidate Donald Trump’s victory in the U.S. presidential election.
The dollar fell 0.4% against a basket of major currencies, on track for its biggest single-day decline since at least early September. The euro rose 0.5% to $1.09 against the US dollar.
U.S. Treasury yields inversely proportional to prices after a closely watched weekend poll showed an unexpected surge in support for Democratic candidate Kamala Harris in Iowa, a state previously dominated by President Trump. fell, and the Mexican peso rose.
The poll, conducted by nonpartisan pollster J. Ann Selzer and released late Saturday, is considered the “gold standard” for polling in the state.
“There has been an election premium built in since the start of this week, and that premium is largely due to Trump winning in the polls,” said Mitul Koteka, head of Asian currencies and emerging markets macro strategy at Barclays. said.
Koteka estimated that President Trump’s dollar “premium” was equivalent to a 3% increase in the dollar index. “If Harris wins, we hope to see some of that premium rolled back,” he added.
The dollar posted its biggest monthly gain since April 2022 on rising expectations that Trump will win Tuesday’s election and unexpectedly strong economic data.
Luca Paolini, chief strategist at Pictet Asset Management, said the firm cut some of its exposure to transactions with President Trump last week, as market expectations for a landslide Republican victory exceeded polling results. He said he had withdrawn from bets on the euro.
“There was an unsustainable gap between opinion polls and market expectations,” he said.
In the final days before the vote, the betting market changed rapidly. Trump’s odds of victory narrowed to 54% on the US futures exchange Kalsi and 58% on the offshore cryptocurrency exchange Polymarket. Last week, markets were pricing in a Trump victory by 64% and 67%, respectively.
Investors are betting that if Trump wins and implements trade tariffs and tax cuts, inflation pressures will increase, especially if Republicans control both houses of Congress, and the Federal Reserve will sharply cut interest rates. I think it’s less likely. The Fed is expected to cut interest rates by a quarter of a point on Thursday, two days after the election.
The two-year bond yield fell by 0.02 percentage point to 4.18%, and the 10-year bond yield fell by 0.04 percentage point to 4.32%.
Shares of former President Donald Trump’s Media and Technology Group, which manages the free-speech-focused social media group Truth Social and trades under the ticker DJT, have been on a volatile New York market. It rose 15% in trading by mid-afternoon.
The stock price soared from about $16 a share in early October to more than $50 a share near the end of the month, but has fallen sharply over the past week.
The Mexican peso, seen by many investors as a Trump trade, rose 0.8% to 20.1 pesos to the dollar after President Trump threatened to impose tariffs on imports from Mexico. Ta.
Bitcoin, which had been rising on expectations that President Trump’s outlook was strengthening, fell 2.3% to $67,614 on Monday. The Republican candidate has positioned himself as a pro-crypto candidate, vowing to end regulatory crackdowns and winning the support of Silicon Valley’s biggest crypto investors, including Andreessen Horowitz.
Trinh Nguyen, senior economist for emerging Asia at Natixis, said that in addition to concerns about Trump’s tariffs, investors are also focused on his proposed corporate tax cuts. have a significant impact on the US growth trajectory.
“There is a lot of pent-up investment that has been put on hold due to uncertainty. [future of the] the Inflation Control Act and the corporate tax rate,” she said.
