US election outlook
America’s seven battleground states are all polling within a percentage point or two, ahead of the presidential election says pollster Nate Silver in The New York Times. Odds of 50-50 for Donald Trump versus Kamala Harris “is the only responsible forecast”. But if pushed, “my gut says Donald Trump”.
Traders have the same intuition. On top US betting markets, Trump has more than 60% odds of winning next week, with Harris below 40%. In financial markets, the “Trump trade” is back, says the Dealbook column in the same paper. Oil firms and cryptocurrencies – which should do well under the Republican – are rallying.
Though Trump wants a weaker dollar, the greenback is rising as markets move to price in the inflationary impact of his tariff plans. Bitcoin is the “quintessential Trump trade”, says Richard Abbey on Bloomberg. Trump’s promises to support deregulation have made him “the darling” of the crypto industry. Bitcoin has leapt more than a third since early September, tracking Trump’s rising chances of winning.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
For financial markets, the biggest impact could come from higher bond yields (bond yields move inversely to prices). Investors have been selling off US government debt on expectations that a Trump administration will let inflation rip. Yields on the benchmark US ten-year Treasury have risen from 3.6% in September to 4.2% now, a “massive move” in bond-market terms, says Ben Levisohn in Barron’s. The story goes that Trump will be more spendthrift than Harris, necessitating higher borrowing costs for the US Treasury.
Investing with your politics is a bad way to lose money...
Still, reading the tea leaves is rarely straightforward. The bond spike could have just as much to do with strong US growth and bets on slower rate cuts ahead. History shows that “investing with your politics is one of the worst ways to lose money”. US equities tend to rise “regardless of which party controls the White House”. Forces beyond domestic politics ultimately matter more for investors, agrees Jim Reid of Deutsche Bank. Energy shares, for example, did far better under Joe Biden than they did under pro-fossil-fuel Trump.
Regulation matters, but world events are more decisive. There is now an “overwhelming consensus” among hedge funds that Trump is heading for victory, says Katie Martin in the Financial Times. That could be a misreading of polls that still show a virtual “coin toss”. Some “big egos” on Wall Street will look very silly if Harris prevails. Indeed, “market pricing is a lot more cautious”, says George Saravelos of Deutsche Bank. For now, the US stocks most sensitive to Trump’s tariff plans are “moving sideways”, rather than selling off.
Similarly, the euro, which could approach parity with the dollar in a full-blown trade war, is still at $1.08. “Hesitant to make big wagers that could jeopardise this year’s strong gains”, some asset managers are cutting market exposure before the vote, says Caitlin McCabe in The Wall Street Journal. This year has served up market-negative election surprises in Mexico, India and France, says Zachary Kurz of PinnBrook Capital. Why should the US be any different?
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
Two thirds of easy access savings accounts come with restrictions – can you access your savings in an emergency?Out of the top 30 easy access savings on the market, 22 come with some sort of restriction on how fast you can access your money, according to new research.
-
Most popular London boroughs: Full list of in-demand places to move toA deluge of people move to or within Britain’s capital each year – but which area is the most popular? We look at the most in-demand London boroughs in 2025.
-
David Ellison: America's new media mogulDavid Ellison is building a mighty new force in old and new media. Critics worry that he will prove to be a Trumpian patsy. Is that fair?
-
Global investors have overlooked some of China’s best growth stocksOpinion Dale Nicholls, portfolio manager, Fidelity China Special Situations, highlights three Chinese businesses where he’d put his money
-
How Next defied the odds and positioned itself as a British high-street stapleNext rose from a near-death experience and now thrives as a high-street staple. What's driving its success – and should you invest in the retailer?
-
Alok Sama on AI and how to invest in the future of technologyInterview Alok Sama, the former president and chief financial officer of Masayoshi Son’s investment vehicle SoftBank Group International, explains AI’s potential
-
The private equity puzzleListed private equity trusts still trade at large discounts, despite sales that validate their valuations
-
Why investors should avoid market monomaniaOpinion Today’s overwhelming focus on US markets leaves investors guessing about opportunities and risks elsewhere
-
Can Rachel Reeves save the City?Opinion Chancellor Rachel Reeves is mulling a tax cut, which would be welcome – but it’s nowhere near enough, says Matthew Lynn
-
Pierre-Édouard Stérin wants to make France great againConservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
