Former U.S. President and Republican presidential candidate Donald Trump was shot during a campaign event, leading to expectations that the so-called 'Trump trade' will gain momentum in the financial markets. Analysts predict that the trend of betting on Trump's election, including the strengthening of the U.S. dollar, will intensify. Bitcoin, considered a pro-Trump asset, surpassed the $60,000 mark per coin immediately after the attack.
In the Asian foreign exchange market early on the 15th, the U.S. dollar showed strength against most currencies. The Dollar Index, which measures the value of the dollar against six major currencies, rose 0.2% to around 104.3. Mark McCormick, Global Head of Strategy at Toronto Dominion Bank, said, "(This attack) reinforces that former President Trump is leading the presidential race," adding, "We will maintain our forecast for a strong U.S. dollar through early next year."
In particular, the attack has highlighted a preference for safe-haven assets, with expectations that buying of the dollar, yen, and gold could continue throughout the week. Just before news of the attack broke last weekend, Bitcoin was trading around $58,000 but quickly surpassed the $60,000 level and has maintained an upward trend since. This reflects not only Trump's pro-Bitcoin stance but also some investor anxiety. According to the global cryptocurrency market site CoinMarketCap, as of the morning of the 15th, Bitcoin was trading at around $60,822, up more than 3.6% from the previous close.
There is also a flood 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 card, and other financial stocks are expected to benefit in the stock market. In the bond market, a 'steepener trade'?buying short-term bonds and selling long-term bonds?seen after the first TV presidential debate is expected to reappear.
Michael Forbes, CEO of Talbucken Capital Advisors, said, "If the market perceives Trump's chances of winning to be higher than on Friday (before the attack), 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 "there could be steeper pressure on the yield curve."
If former President Trump wins the November election, a tough trade policy, deregulation, and various tax cuts are expected. This will inevitably raise concerns about fiscal deficits, which typically put upward pressure on government bond yields and increase inflation expectations.
Marco Papik, an analyst at BCA Research, noted that as Trump's chances of election increase, concerns over fiscal outlook will also grow, emphasizing the need to monitor long-term government bond yields. Forbes CEO added, "Trump's policies are more inflationary than Biden's," and predicted that as Trump's election probability rises, the Federal Reserve (Fed) will likely keep interest rates on hold for a longer period to maintain flexibility.
There is also analysis suggesting that the shooting incident will have little impact on the stock market. Steve Sosnick, Chief Strategist at Interactive Brokers, said, "Stock investors generally do not react unless an event clearly affects corporate sales, income, or cash flow," adding, "This incident will be no different." U.S. index futures, which opened on the evening of the 14th Eastern Time, moved sideways. However, the market expects that while the Trump shooting incident may not change the long-term trajectory of the stock market, it could increase short-term volatility.
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