Several JP Morgan strategists have revealed that markets are now starting to price in the what is being called the “Trump Trade,” as betting odds continue to increase in favor of a GOP sweep during the November elections which are now only a few weeks away. In fact, according to Investing.Com, the probability of former President Donald Trump getting re-elected to the Oval Office has now gone up to 56 percent according to the betting markets, while the likelihood of the GOP taking control of the Senate has now gone above 80 percent. Three seats are believed to be changing hands. And that could not be better news for those of us who want to see America put back on the track to success.
Here’s more from the report:
The rising probability of a Republican sweep has also been reflected in recent market movements over the past two weeks, including stronger U.S. equities—particularly in the banking sector—a strengthening dollar, tighter credit spreads, and higher yields on U.S. Treasury securities.
That being said, “we do not believe that the probability of a Republican sweep embedded in markets at the moment is as high as the around 45% currently implied by betting odds,” JPMorgan strategists went on to state in a note. The strategists then made a case that if the “Trump trade” is considered in similar fashion to its 2016 counterpart, which was characterized by significantly higher Treasury yields, a stronger dollar, along with American equities outperforming international markets, outperformance in the banking sector, tighter credit spreads, the recent shifts in the market have been on the modest side.
Although current asset performances suggest a significantly higher probability of a Trump victory compared to two weeks ago, markets are still “a long way from fully pricing the 2016 experience,” strategists note. “In other words, while markets have now begun to price in a more significant probability of a Republican sweep, we believe that there are still some way from even pricing the around 45% probability implied by betting odds, let alone from fully pricing in a Republican sweep,” they wrote.
“They also reiterated their previous view that a Republican sweep, aside from potentially benefiting bitcoin from a regulatory standpoint, would likely be bullish for gold. This is due to the reinforcement of what some have termed the ‘debasement trade’ through both tariffs and expansionary fiscal policy,” the report concluded.