Trump victory trades to swell after shooting, investors say

Saturday’s shooting at a former US President’s election rally has led investors to believe that it increases his chances of winning back the White House. Trades betting on his victory are expected to rise in the coming week. The US President was shot in the ear during the rally in Pennsylvania, which is being treated as an assassination attempt. The market had previously reacted to the prospect of his presidency by pushing the dollar higher and preparing for a steeper US Treasury yield curve. This incident could impact the upcoming election rematch between the two major party candidates, which has been closely contested in opinion polls. World leaders and politicians condemned the shooting, while some industry executives expressed their support for the President. The incident comes after a shaky performance by the opponent in a recent presidential debate. Immigration and the economy are key issues for US voters, and despite Biden’s solid economy, consensus among voters is that Trump is the better candidate. Market analysts anticipate a more hawkish trade policy, less regulation, and looser climate change regulations under a second Trump administration. Investors also expect an extension of expiring corporate and personal tax cuts, which raises concerns about rising budget deficits. The possibility of a change in Federal Reserve Chair is also being discussed. Longer-end Treasury yields have risen in anticipation of a second term for the President. The narrowing gap between 2-year and 30-year notes and the negative spread between two-year and 10-year Treasury yields highlight changing expectations about the Fed’s rate cut. The election outcome is seen as having implications for fiscal policy, inflation, and interest rates. Despite the shooting incident, stock prices continue to rise, with both the S&P 500 and Dow Jones Industrial Average hitting record highs. Analysts suggest that Republican victories in the past have led to improved sentiment and increased spending and investment. Soon after the shooting, billionaire hedge fund manager Bill Ackman and Tesla CEO Elon Musk expressed their support for the President.