'Trump Trade' Continue Tonight? BlackRock Warned It!!

Before the opening of the U.S. stock market today, the three major stock index futures rose slightly, Chinese stocks rose across the board, and Ideal Auto rose by more than 4%; most technology stocks rose, but Tesla fell by 1.6%. Most U.S. bonds rebounded, and the yield on the 10-year U.S. Treasury bond fell slightly to below 4.2%. Spot gold fell from its historical high, falling below $2,720 per ounce.

 

The “Trump trade” which is on fire has recently affected not only the US market but also European markets. However, BlackRock believed that the market underestimated the risk of a stalemate in the US election.

 

In an interview with Bloomberg at local time on Thursday, October 24, Jean Boivin, the managing director of the research department of the global giant of asset management BlackRock, said that if a candidate objects to the election results, this objection will lead to “a few weeks of highly confusing legal disputes”, which may disrupt the capital markets.

 

 

Boivin said it would be “foolish” to try to trade on the US election. What people really need to pay attention to is the competitive election situation. This situation may be unfavorable to the market but it is not priced into the market. He believed that investors should have been prepared for this.

If the election is deadlocked, voters and investors may not know the outcome until after election night, especially in a situation where both candidates choose to challenge the count in key swing states.

 

The US stock market is still near record highs this month due to the “Trump deal” and the “economy is not landing”. Conversely, the US bond market has set off a wave of selling whose severity can compare with that of 1995. Analysts believed that a rise in US bond yields was partly driven by Trump's claims of high tariffs. This claim could exacerbate inflationary pressures.

 

As for exchange rate markets, the dollar index rose to a three-month high, expecting its best monthly performance since 2022. Standard Chartered estimated that around 60% of its increase can be attributed to the prospect of a Trump victory.