Markets favoring 'Trump trades' as results roll in

(Reuters) - U.S. stock futures and the dollar surged as investors wagered Republican Donald Trump could win the U.S. presidential election, although officially the race remained too close to call.

Trump was broadly drawing more support than he did in his failed 2020 campaign and had won 211 Electoral College votes compared with 145 for his Democratic rival, Vice President Kamala Harris, with a third of the vote counted.

A candidate needs a total of 270 votes in the Electoral College to claim the presidency.

MARKET REACTION AT 0445 GMT

* S&P 500 e-mini futures rose 1.2%

* The yield on the 10-year U.S. Treasury note rose to a four-month high of 4.47%

* The U.S. dollar index was up 1.5%

* Bitcoin hit a record high of $75,060

COMMENTS:

BEN EMONS, FOUNDER OF FEDWATCH ADVISORS, WASHINGTON

"Markets are growing confident that the election result will be called and that a 'red sweep' of Congress is possible. U.S. Treasury yields are rising sharply in anticipation that a Republican Congress will pass sweeping tax reform and tax cuts to create conditions for a favorable investment climate in the U.S. With uncertainty seen as negligible, there is a relief rally in liquidity-sensitive assets like crypto and economy-sensitive assets like small caps."

TOM HAINLIN, SENIOR INVESTMENT STRATEGIST, U.S. BANK, MINNEAPOLIS

"While it is still early, we are observing that there is weakness in Mexican peso relative to dollar, S&P 500 futures is up, treasury yields up, all that's pretty indicative of some anticipation of a potential Republican win."

MATT ORTON, CHIEF MARKET STRATEGIST, RAYMOND JAMES INVESTMENT MANAGEMENT, ST. PETESBURG, FL

"I expected yields to move higher, but I am a little bit surprised just to the extent.

"I start to worry when yields cross the 4.50% mark. If we don't reverse that upward trend, I would be more reticent to add too much more risk until we hear from the Fed or get a little bit more guidance with respect to where terminal rates might lie.

"Yields are rising and it's more the association of increased fiscal spending, significantly higher deficits under a Trump versus a Harris administration."

DAVID WAGNER, PORTFOLIO MANAGER AT APTUS CAPITAL ADVISORS IN CINCINNATI, OHIO

“We may not know the official results of the presidential election tonight, but we should know a lot more color regarding the composition of Congress. This may be just as important because it will dictate the direction of taxes next year - corporate taxes and the individual tax issues that are sunsetting at the end of next year - and I believe that this will be the most discussed economic policy over the next twelve months."

MICHAEL GREEN, PORTFOLIO MANAGER, SIMPLIFY ASSET MANAGEMENT, SAN FRANCISCO BAY AREA

"There's very much an emotional component in markets associated with the vote at this point, because it has become a consensus view that if Trump wins, stocks are going up. People are trying to get ahead of it. I don't think there's any meaningful information about what Trump's policy will be until we have much clearer results in terms of both Congress and the presidency."

ARNIM HOLZER, GLOBAL MACRO STRATEGY AT EASTERLY EAB RISK SOLUTIONS, Pennsylvania

"The biggest issue is if Trump or Harris are going to get full mandates. If they don't get blue or red sweeps, it limits the fiscal damage, and that's the best outcome for bondholders."

JAMES KNIVETON, SENIOR CORPORATE FX DEALER, CONVERA, MELBOURNE

"Risk currencies such as the AUD that appreciated ahead of a tightening race are having a pullback as Trump racks up some early wins. US Treasury yields are advancing as well, reacting to the same sentiment."



BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

“As the early results come in, even though none of them are that surprising, we are seeing Treasury yields rising a little bit, the dollar strengthening, bitcoin up; kind of a classic Trump trade. Treasury yields because of a market belief that Trump might be worse for deficit, the dollar’s move because of expectations of new tariffs, and bitcoin, well, Trump is a crypto ‘bro’.

 

 

Source: Investing.com