Is the Trump Trade Back On?

Is This a Revival of the Trump Trade?

As we enter the last full week ahead of the US elections, polls are so tight that it is hard to see big bets on the outcome. In addition, the makeup of Congress and whether one party wins both houses or there is a split government will determine whether the new president can enact his/her agenda. Trump rather than Harris would more likely try to circumvent the process but that is beyond this discussion.

It often feels like reporters look for a theme to explain price action after the fact. I am not saying this is the case with the Trump trade now but since there is some trader chatter about it, let’s explore what the term means.

What is the Trump Trade

Sell bonds (higher yields)

Buy stocks

Buy dollars

Current trends

Dollar up

Bonds down (higher yields)

Stocks up

On paper, some could make the case that current market trends suggest a Trump trade. On the other hand, on closer inspection, a case can be made that an outperforming US economy and little chance of a recession are behind the current trends,

So, is the Trump trade back on?

While some could make the case, there seems to be more to current trends than election results speculation.

Looking ahead, how the new Congress plays out will be important in the extent of the reaction to the election results.

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