The attempt on Donald Trump’s life over the weekend has sent shockwaves through the political and financial world. While the incident may or may not impact the upcoming election in November, betting markets have shown an increased chance of Trump winning, with his odds rising to 67% on Sunday compared to 60% on Friday.
For investors, this has significant consequences. Since President Joe Biden’s poor debate performance two weeks ago, so-called “Trump trades” have become more popular. Traders are betting that a second Trump presidency would be more inflationary than a Democratic victory, citing his policies on immigration and tariffs as drivers of consumer prices.
However, despite these expectations, inflation appears to be slowing and interest rates could be heading lower. Bond yields have decreased since the beginning of the month, and Federal Reserve Chair Jerome Powell has expressed concerns about the labor market, hinting at possible rate cuts. Powell’s upcoming speech and retail sales data will provide more insight into the economic landscape.
In other news related to Trump, a Federal judge dismissed a criminal case against him alleging unlawful possession of classified documents. Republicans are pushing for the U.S. to be a dominant energy producer, which could benefit old-fashioned energy stocks but harm clean energy stocks. Banks may also benefit from light-touch regulation under another Trump term.
As the election draws closer, the popularity of “Trump trades” is expected to increase. Investors are advised to stay vigilant and adjust their portfolios accordingly. The impact of Trump’s policies on various sectors, such as energy, banking, and technology, will continue to be closely monitored in the coming weeks.
