Nov 15, 2024 04:58 PM
OPINION
Commentary: What the ‘Trump Trade’ Reveals About Where Asset Prices Are Headed
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Supporters are seen cheering in bulletproof glass as then-Republican presidential nominee Donald Trump speaks at a campaign rally in Lititz, Pennsylvania on Nov. 3. Photo: VCG
The U.S. presidential race gave rise to what is called the “Trump trade.”
The term describes the trades made by investors betting on Donald Trump’s return to the White House. They typically include trades such as going long on U.S. stocks, the dollar, or cryptocurrencies, while shorting U.S. government bonds. These bets reveal something about where investors believe asset prices will go under the Trump administration.
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- The "Trump trade" involves investor bets on U.S. stock gains, dollar strength, and cryptocurrency based on anticipated Trump policies like tax cuts and increased tariffs.
- Following Trump's election indications, U.S. stocks, Bitcoin, and the dollar jumped, while U.S. bond prices fell, affecting global markets with emerging markets particularly hard-hit.
- The election impacted global currencies, with significant decreases in the Mexican peso, euro, yen, and other major Asian currencies against the dollar.
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What Happened When
- Late September 2024：
- China implemented a series of stimulus policies to brace against possible external challenges.
- In the months leading up to the Nov. 5, 2024 election：
- Trump trade effects were noticeable with market movements following polls and predictions.
- Early November 2024：
- Investors increased Treasury holdings as Kamala Harris appeared to gain ground.
- Night of the Nov. 5, 2024 election：
- Signs of Trump's victory led to a rise in U.S. stocks, the dollar, and Bitcoin, while U.S. bond prices fell.
- Early on Nov. 6, 2024：
- Trump's win was confirmed, boosting U.S. stocks and Bitcoin to all-time highs; the dollar saw its biggest jump against major currencies since 2020, and U.S. bond prices plunged.
- Nov. 6, 2024：
- Mexico's currency took a hit, contributing to the largest single-day drop in a key emerging market currency index since February 2023.
- First trading day after the election：
- The euro, British pound, and Swiss franc each lost more than 1% against the dollar.
- Following Trump's victory：
- The Japanese yen and South Korean won lost 1.99% and 1.69% respectively against the dollar, and the Chinese yuan weakened by over 1%.
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