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The Trump trade is making a comeback as recent polls show a shift in favor of the former president in the upcoming election.
Due to the unique nature of the Electoral College, even small changes in presidential polls in a few key states could indicate a significant move towards either Donald Trump or Kamala Harris.
With the 2024 election approaching its final stages, polls are gaining more importance. Election Day is set for Nov. 5, and early voting has already begun in some states, including the battleground states of Georgia and North Carolina.
According to the latest analysis from 538, Trump currently holds a slight edge in the race with a 52% chance of winning. Just two weeks ago, Harris was favored with a 58% chance of winning. However, 538 warns that the race is still too close to call.
While Harris maintains a narrow lead in national polls, her advantage has decreased in October. Additionally, her leads in critical swing states like Michigan, Pennsylvania, Wisconsin, and Nevada have diminished, while Trump has expanded his lead in Georgia and North Carolina.
It’s worth noting that many presidential polls in previous cycles have been inaccurate, often underestimating Trump’s support. As a result, some observers are turning to betting markets for a more reliable prediction, as those who wager money have a greater incentive to make an accurate assessment.
However, recent shifts on prediction platforms like Polymarket have raised doubts about their accuracy, with a few large bettors influencing the odds in favor of Trump.
Financial markets are also closely monitoring the election, as the next president could have a significant impact on the economy. Stanley Druckenmiller, founder of Duquesne Family Office, pointed to the financial markets’ confidence in Trump’s victory.
Key indicators of the Trump trade include the performance of the U.S. dollar, Treasury yields, Bitcoin, and shares of Trump Media and Technology. These indicators saw a boost earlier in the year when Trump was seen as the frontrunner, but declined when Joe Biden withdrew from the race and Harris took his place on the Democratic ticket. However, the Trump trade has rebounded in October.
The U.S. Dollar Index has risen by 2% this month, while the 10-year Treasury yield has surged by about 40 basis points. This is attributed to the expected impact of Trump’s policies, including tariffs and tax cuts, on the dollar and U.S. debt.
Bitcoin has also seen a 12% increase in October, as Trump has embraced the crypto industry despite previously criticizing Bitcoin as a “scam.”
Shares of Trump Media, the parent company of Truth Social, have jumped by 83% so far in October. The stock has been volatile throughout the year, reflecting Trump’s election prospects.
Other aspects of the Trump trade have shown mixed performance, influenced by factors beyond the election. Energy stocks, which could benefit from GOP policies, have remained relatively stable amid fluctuations in oil prices due to geopolitical tensions.
Sectors like finance and healthcare could experience less regulation under a Trump administration. However, insurance stocks declined after weak guidance from UnitedHealth, while bank stocks rose on strong quarterly results.
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