The Trump trade is taking off on election night
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- Markets are moving on early US election results that favor Donald Trump.
- US Treasury yields and the dollar are rising, with stock futures and cryptocurrencies also gaining.
- The moves reflect the expected impact of Trump's policies.
Investors are turning to the Trump trade on election night as early results favor the former president.
Trump has a commanding electoral-vote lead, with 230 to Democratic candidate Kamala Harris' 200 as of 12 a.m. in New York. The New York Times's Needle currently gives Trump an 88% chance of victory, while online betting sites, including PredictIt and Polymarket, also showed Trump comfortably ahead in the race for the White House.
The strong early showing has resulted in a continuation of the so-called Trump trade, which has for months hinged on the former president's election odds. Central to the trade are Trump's plans for a near-universal tariff and mass deportations, which would push inflation higher.
Here's a rundown of how markets are moving in response to Trump's climbing odds:
Treasury yields are sharply higher
The benchmark 10-year Treasury yield climbed 17 basis points to 4.44%, the highest since early July. The 2-year yield — the most directly sensitive to Fed monetary-policy changes — gained 9 basis points to 4.27%.
A Trump victory is viewed as an inflationary event, which would fuel higher prices and wage growth, respectively.
Investors have been pricing in higher yields for weeks on the view that Trump's policies would make it hard for the Fed to lower rates much further, especially if inflation flares.
The US dollar surged
The Bloomberg Dollar Spot Index spiked 1.4% to its highest level in more than three months. The greenback climbed against every G10 currency, including gains of more than 1% against the euro and yen.
The dollar also rose 3% versus the Mexican peso. The currency cross has been seen as a bellwether of Trump's election chances, given his expressed desire to "reshore" Mexican manufacturing back to the US.
The expected inflationary nature of Trump's policies would push interest rates higher and could prompt the Fed to tighten monetary policy, despite its current easing efforts. Those climbing rates would then underpin further dollar gains.
Stock futures moved higher
Supporters of Trump's proposed tax and regulatory policies view them as pro-business moves that would boost corporate profits and deal activity.
S&P 500 futures were up 1.2%, while Dow Jones Industrial Average futures were up 1.1% and Nasdaq 100 futures rose 1.2%.
Small-cap stocks spiked
Futures on the small-cap Russell 2000 index rose 2.7% as of 12 a.m. in New York. They are viewed as getting an outsize boost from Trump's protectionist policies, since they generally have more domestic operations.
Bitcoin hit a record high
The cryptocurrency set a new all-time high above $75,000. A Trump win is seen as bullish for bitcoin and the broader cryptocurrency industry, as Trump has firmly embraced digital assets in recent years.
Trump Media also traded higher
Trump Media and Technology Group shares rallied more than 10% in after-hours trading. The stock has seen a meme-like rally in recent weeks as the former president strengthened his position in betting markets and the polls.
Still, it's a highly volatile stock, closing more than 10% higher or lower in five of the last six days. Last week it saw a three-day skid of 40% as Harris election odds surged on promising early polling.