Bitcoin and Dollar Strengthen After Trump Shooting... Bets on 'Trump Victory' Expand

Former U.S. President and Republican presidential candidate Donald Trump was shot during a campaign event, leading to speculation in financial markets that the so-called 'Trump trade,' which anticipates his victory, will gain momentum. Bitcoin, considered a pro-Trump asset, surpassed the $60,000 mark per coin immediately after the attack, and the dollar also continued its strength.

[Image source=AFP Yonhap News]

According to the global cryptocurrency market site CoinMarketCap, as of the morning of the 15th, the price of Bitcoin is trading at around $60,822, up more than 3.6% from the previous close. Just before news of former President Trump broke last weekend, Bitcoin was trading around $58,000, but it has since surpassed $60,000 and maintained an upward trend.

In the Asian foreign exchange market, the dollar showed strength against most currencies in early trading on the same day. The Dollar Index, which measures the value of the dollar against six major currencies, rose 0.2% to around 104.3.

Following this shooting incident, there is a forecast that safe-haven asset preference will be highlighted, potentially leading to continued buying of the dollar, yen, and gold throughout the week. Mark McCormick, Global Strategy Head at Toronto Dominion Bank, said, "This incident reinforces that former President Trump is leading the (presidential) race," and added, "We will maintain our outlook for a strong U.S. dollar until early next year."

U.S. index futures, which opened on the evening of the 14th local time, are currently showing a slight upward trend. The market currently views the Trump shooting incident as unlikely to change the long-term trajectory of the stock market but expects it to increase short-term volatility. Jack Ablin of Cresset Capital said political violence causes instability, noting, "What the market worries about is uncertainty and volatility."

There is also an influx of analysis suggesting that the so-called Trump trade will gain further momentum. Bloomberg News pointed out that alongside the dollar's strength, healthcare, energy, credit cards, and other financial-related stocks will be beneficiaries in the stock market. Additionally, in the bond market, a so-called 'steepener trade'?buying short-term bonds and selling long-term bonds?expected since the first TV presidential debate, is anticipated to appear.

Michael Forbes, CEO of Talbucken Capital Advisors, said, "If the market perceives the probability of a Trump victory to be higher than on Friday (before the shooting), the latter part of the bond market will be sold off in the same way as immediately after the debate." Priya Misra, portfolio manager at JP Morgan, predicted, "Volatility will increase," and "This could put steeper pressure on the yield curve."

If former President Trump wins the November presidential election, a tough trade policy, deregulation, and various tax cuts are expected. In this case, concerns about the fiscal deficit will inevitably increase. This is generally seen as a factor that puts upward pressure on government bond yields and raises inflation expectations.

Marco Papik, an analyst at BCA Research, pointed out that as the likelihood of former President Trump's election increases, concerns about fiscal outlook will inevitably grow, emphasizing the need to monitor long-term government bond yields. CEO Forbes said, "Trump's policies are more inflationary than Biden's," and predicted that as the probability of Trump's election rises, the Federal Reserve (Fed) may keep interest rates on hold for a longer period to secure room for maneuver.