Financial Markets React to Trump’s Attempted Assassination
A Rise in Market Volatility Expected
The attempted assassination of Donald Trump has sent shockwaves through global financial markets, with investors anticipating a further surge in the "Trump trade". The trade, which is based on the assumption that Trump’s return to the White House will lead to tax cuts, higher tariffs, and looser regulations, had already been gaining momentum since President Joe Biden’s poor performance in the last presidential debate.
Markets React Early in Asia Trading
The dollar has started to rise against most peers, with the Mexico peso leading the slide. Bitcoin has also risen above $60,000, potentially reflecting Trump’s crypto-friendly stance. Futures on the S&P 500 Index for September have risen 0.1%.
Experts Weigh in on Market Implications
According to Mark McCormick, global head of foreign-exchange and emerging-market strategy at Toronto Dominion Bank, "The news does reinforce that Trump’s the frontrunner. We remain US dollar bulls for the second half and early 2025." Priya Misra, a portfolio manager at JPMorgan Investment Management, warned that "Political risk is binary and hard to hedge, and uncertainty was high as it is with the close nature of the race. This adds to volatility. I think it further increases the chance of a Republican sweep."
Concerns about Political Instability
While the attempted assassination has increased the likelihood of a Republican sweep, it has also raised concerns about political instability. The emergence of political violence may push investors into haven assets, potentially overshadowing some of the market positioning that has already taken place.
Treasuries Market Distorted
The Trump trade in the Treasuries market, which involves wagering that the yield curve will steepen as long-term bonds underperform, may be distorted by the emergence of political violence. The market has already been anticipating a steepening yield curve, but the increased uncertainty may push investors to seek temporary safety in assets like government bonds.
Other Implications
The attempted assassination may also impact the stock market, with some traders predicting a pick-up in near-term price swings. The market has already been contending with speculation that valuations have become too stretched, given the boom in artificial-intelligence stocks and the risks posed by elevated interest rates and political uncertainty. Investors may seek temporary safety in defensive stocks like mega-cap companies.
Conclusion
The attempted assassination of Donald Trump has sent shockwaves through global financial markets, with investors anticipating a further surge in the "Trump trade". While the market implications are still uncertain, experts are warning of increased volatility and potential distortions in the Treasuries market.
FAQs
Q: What is the "Trump trade"?
A: The "Trump trade" refers to a series of wagers made by investors based on the assumption that Trump’s return to the White House will lead to tax cuts, higher tariffs, and looser regulations.
Q: What impact will the attempted assassination have on the stock market?
A: The attempted assassination may impact the stock market, with some traders predicting a pick-up in near-term price swings.
Q: What is the yield curve?
A: The yield curve is the relationship between interest rates on government bonds with different maturity dates.
Q: What is a steepener trade?
A: A steepener trade is a bet that the yield curve will steepen, with longer-term bonds underperforming shorter-term ones.
Q: How will the attempted assassination impact the Treasuries market?
A: The attempted assassination may distort the Trump trade in the Treasuries market, pushing investors to seek temporary safety in government bonds.
Author: fortune.com
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