From U.S. stocks to U.S. bonds, the "Trump deal" has stalled, and a new possibility is emerging
2024-07-23
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
After Biden dropped out of the race, Harris became the Democratic presidential candidate.As political uncertainty intensifies and markets readjust their trading expectations, the “Trump deal” is beginning to show signs of cooling.
The so-called "Trump deal" features expectations of tax cuts, higher tariffs, deregulation and increased infrastructure spending to drive stock market growth and bond market volatility.During the active period of the "Trump trade" this year, coupled with the recovery of interest rate cut expectations, the weakening of the US dollar, the sharp rise of small-cap stocks in the US stock market, the selling of long-term US bonds, and the continuous record highs of gold prices. Trump's support for traditional fossil energy such as oil and natural gas has continuously pushed up the rise of the Dow Jones Industrial Average.After Harris was nominated,The U.S. bond market began to prepare for the "possibility of a new president."On Monday, the 10-year U.S. Treasury bond showed signs of fatigue, with the yield falling 1 basis point to 4.24% during the day, while the 2-year short-term bond yield rose. The yield spread between long-term and short-term bonds narrowed, and the "Trump deal" characterized by steepening yields showed signs of cooling.The S&P 500 had its biggest gain since early June, and the Nasdaq 100 rose 1.5%. The index of the "Big Seven" tech companies rose about 2.5%, includingTeslaandNvidiaThe Russell 2000 rose 1.7%.The dollar index recovered most of its intraday losses after a rapid fall in the morning, and is down 0.1% on the day. Bitcoin prices did not change much, and gold prices remained weak.In Asia, the Nikkei 225 and South Korea's Kospi both fell more than 1% on Monday, while Australia's S&P/ASX200 fell 0.7%.The reason behind this may also be that funds have cut their bets on the "Trump deal."
Increased probability of “stalemate”Analysts believe that the Democrats may win one of the two houses of Congress, and the probability of a "stalemate" will increase. Although Harris's approval rating is still far lower than Trump's, the probability of the lower-tier Democrats winning the House of Representatives election has greatly increased, which will suppress Trump's chances of winning and is bearish for the "Trump deal."Stocks based on a "Democratic win" scenario, such as renewable energy,SolarCompanies, electric car makers, marijuana stocks start to rise, while "Trump trades" such as oil and gas, financial and healthcare stocks began to cool.With four months to go until the election, Peter Boockvar, an analyst at The Boock Report, believes that no matter which party wins the election, the debt and deficit will continue to soar.A Trump win would fully extend the 2025 tax cuts, but would likely bring in a slew of tariffs, more protectionism and a potentially weaker dollar.If Harris wins, some of Trump's tax cuts will not be extended, there will be some tariff policies, protectionist policies will be more significant, and the US dollar may weaken.
Other analysts have pointed out that this political turmoil should not materially change the direction of the market. Tom Essaye of The Sevens Report said: "The ultimate direction of the S&P 500 will still be determined by economic growth."⭐Star Wall Street News, don’t miss out on good content⭐This article does not constitute personal investment advice and does not represent the platform’s views. The market is risky and investment should be cautious. Please make independent judgments and decisions.
