Assets linked to the probability of U.S. Republican candidate Donald Trump winning the Nov. 4 elections are experiencing renewed volatility following an attempted assassination on the former president. The incident has had ripple effects across various financial markets, reflecting investors’ reactions and expectations.
Cryptocurrency Market Response
Bitcoin (BTC) has surged by 7% to $62,500 since the weekend attack, with the pro-crypto candidate’s chances of winning the elections rising to 70% on Polymarket. This increase in Bitcoin’s value is indicative of the market’s belief that a Trump victory would be favorable for the cryptocurrency industry. Trump-themed Polifi tokens have also seen a sharp increase in value, demonstrating the intersection of politics and finance.
Political and Economic Implications
Trump’s embrace of crypto in recent months to appeal to the community and his scheduled appearance at the Bitcoin 2024 conference suggest a potential shift in his stance towards the industry. This change has positioned Bitcoin and the broader crypto market as bets on Trump’s electoral success.
The Chinese yuan (CNY) has weakened against the U.S. dollar amid fears of higher trade tariffs under a Trump presidency. Trump’s history of imposing tariffs, especially on Chinese goods, has led to concerns about escalating trade tensions. The Mexican peso (MXN) has also slipped due to uncertainties surrounding Trump’s policies towards Latin America.
Market Reactions and Predictions
Futures tied to the 10-year Treasury note have declined, indicating expectations of higher yields if Trump returns to the White House. The anticipation of increased spending, tax cuts, and budget deficits under a Trump administration is driving this market response. Investment banks are forecasting a potential steepening of the yield curve if Trump wins, which historically has triggered risk aversion in financial markets.
Despite Asian stocks dipping on disappointing economic growth figures in China, futures tied to the S&P 500 are showing a positive trend. This suggests a favorable opening on Monday, reflecting investor optimism amidst the political uncertainties. The dollar index, tracking the greenback’s value against major fiat currencies, has also shown a slight increase, indicating market participants’ cautious approach.