Trump’s Election Victory Sparks Market Frenzy
Treasury Yields and Dollar Soar
Markets are experiencing a seismic shift in response to Donald Trump’s US election victory. The benchmark 10-year Treasury yield has surged as much as 21 basis points to 4.48%, its highest level since early July. The two-year yield, closely tied to Fed monetary policy changes, has gained nine basis points to reach 4.27%. This spike in yields is largely attributed to Trump’s plans for widespread tariffs and mass deportations, which are expected to drive inflation higher.
Dollar Strengthens Against Major Currencies
The Bloomberg Dollar Spot Index has risen as much as 1.7%, its largest gain in four years, hitting its highest level since November 2023. The greenback has strengthened against every G10 currency, with notable gains exceeding 1.7% against both the euro and yen. The dollar has also surged as much as 3.5% against the Mexican peso before paring gains. This currency cross is seen as a key indicator of Trump’s election chances, given his stated goal of “reshoring” Mexican manufacturing back to the US.
Stock Market Rally
Supporters of Trump’s proposed tax and regulatory policies view them as pro-business moves that would boost corporate profits and deal activity. As a result, the S&P 500, Dow Jones industrial average, and Nasdaq 100 have climbed to fresh record highs. Tesla shares have spiked as much as 15% on expectations that the electric automaker will be a major beneficiary of Trump’s presidential return. Trump Media and Technology Group shares have rallied 35% at intraday highs before settling about 9% higher.
Cryptocurrency Sees Strong Gains
The cryptocurrency has risen as much as 10% to set a new high above $76,000 before retreating slightly. A Trump win is seen as bullish for bitcoin and the broader cryptocurrency industry, as Trump has firmly embraced digital assets in recent years. According to Naeem Aslam, chief investment officer at Zaye Capital Markets, “With Trump’s win, the conditions may be right for Bitcoin’s price to continue its ascent as investors seek alternatives to the dollar.”
Volatility Index Drops
The CBOE Volatility Index, which measures the forward 30-day expected volatility in the S&P 500, has dropped 20%. This decline suggests that investor nerves are calming, as Wall Street’s so-called fear gauge generally trades inversely to the benchmark index.
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