Since October, Trump has surpassed others in the polls, global market sentiment has changed rapidly, and the trading focus has gradually shifted to betting on the election results. As the US election enters the final stage, the market seems to have sensed an increasingly clear signal, and "smart money" has already priced in a significant tilt towards Trump.
The market is betting real money on Trump's victory
On Tuesday local time, the well-known "Trump concept stock", Trump Media Group, continued to surge 8.76% after a 21.59% jump on Monday, with a cumulative increase of 220.54% since October. In addition, the KBW Regional Bank Index has risen 10% in the past month, far outperforming the broader market, indicating the market's significant confidence in Trump-related assets.
The US dollar and US bond yields also show signs of the "Trump trade". Currently, the US dollar index has risen sharply to 104-105, up for the fourth consecutive week, with non-US currencies under pressure; the 10-year US bond yield has risen from the previous low to 4.28%, up 48bp from the end of September.
At the same time, Bitcoin has become one of the core assets of the "Trump trade" due to Trump's support for cryptocurrencies. On October 30, Bitcoin broke through $73,000 again after 7 months, just 0.2% away from the all-time high. Data shows that since October, the US Bitcoin spot ETF has attracted over $3 billion in net inflows, with strong institutional buying.
Total net inflows of Bitcoin spot ETF
In the past few weeks, the strong US dollar, rising US bond yields, and the strength of the banking and crypto sectors, which are the most direct "Trump concept stocks", indicate that the market is betting real money on Trump's victory.
The potential impact of a Trump victory on major assets
As the US election heats up, the expectation of Trump's victory is increasing, and the market is starting to bet on the potential impact of his policies on different asset classes. The economic impact of Trump's policies may lead to a clear differentiation among major assets, and the global economic landscape will also change accordingly.
1. The US dollar may strengthen
Trump's policy proposals, including raising tariffs and cutting taxes, are expected to push up inflation expectations, making the Federal Reserve more cautious about rate cuts, which will support the strength of the US dollar. Currently, the US economic fundamentals are sound, especially the high employment rate and moderate inflation, which provide strong support for the US dollar, and the US dollar is expected to continue to strengthen in the global foreign exchange market.
2. Cyclical and tech sectors may become the focus of the US stock market
The market generally expects a boost to US stocks if Trump is elected. The US economy is relatively resilient, and Trump's proposals for tax cuts and deregulation are expected to promote corporate profitability and consumer spending, with cyclical and tech sectors becoming the focus of investors. Supported by fiscal expansion, strong AI industry demand, and global capital reallocation, the medium to long-term outlook for US stocks will be more attractive.
Historically, US stocks have mostly risen in election years, as in 2016 when Trump's victory and expansionary policies drove a rapid rebound in the S&P 500, providing a historical reference for this year's US stock performance.
3. Commodity demand may face adjustments
Compared to the Democrats, the Republican Party's energy policy tends to support the traditional energy industry. Trump's victory may relax restrictions on fossil fuels and promote the expansion of the oil and gas industry, which may suppress oil prices in the medium to long term. The current Middle East situation is likely to ease, and the expected decline in global economic growth may also weigh on oil demand, leading to short-term volatility in oil prices.
Meanwhile, the gold market has been persistently strong at high levels, already pricing in a significant amount of hedging and inflation-hedging demand under the Trump policy framework, to some extent deviating from the fundamental support level based on the US dollar and real interest rates. If uncertainty is reduced after the election, gold prices may face correction pressure.
4. Bitcoin will usher in a new round of bull market
The cycle of this year's US election coincides with the cycle of Bitcoin, and Trump's crypto-friendly policies, his deep involvement in various crypto activities and related products, and his declaration of "making Bitcoin the US strategic reserve" have all ignited the crypto market. A Trump victory would be a huge positive for the crypto sector, and Bitcoin will usher in a new round of bull market, with the influence of crypto assets reaching new heights in the global market.
Conclusion
The "Trump trade" is currently profoundly impacting the pricing of global assets. Regardless of the final election result, the global market will face an unprecedented opportunity for asset revaluation.
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