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US Election Night: Is Trump 2.0 here?

US Election 2024 2 minutes to read
John J. Hardy

Chief Macro Strategist

Summary:  The Election outcome has leaned all night in Trump's favor so far, and the market is running with the Trump 2.0 scenario, in which the Republicans also take control of both houses of Congress.

Markets are piling into the Trump 2.0 trades now as everything is going his way as votes accumulate and Harris’ path to victory is looking increasingly unlikely. We still have to be patient, but markets are trying to call this for good reason as the probabilities lean hard in Trump's favour. Remember that a proper "Trump 2.0" scenario requires control of the House – it could take some time, possibly days, before we know results of all House elections, but with his popular vote so much stronger than the last two elections the odds are leaning for Republican control of the House as well. The Senate looks a cinch for the Republicans as 

NYTimes puts Trump victory odds at 87% at 04:00 GMT

Market reaction is large but orderly - we have to remember that markets have been putting on the Trump 2.0 trade directionally since early October, so the coming hours and days will tell us the degree to which we have priced in a lot of what is to come if the scenario is fully realized:

  • It felt like USDJPY may have been checked by the BoJ when it traded north of 154.00 earlier in the night – it is slightly odd to see EURUSD moving more than USDJPY (although possible geopolitical angle we hadn’t weighed in FX terms in addition to the feared Trump tariffs?)
  • MXN bleeding on the Trump tariff fear
  • Gold is just sitting this out – possibly on the rise in real rates as US treasury yields have risen aggressively
  • Interesting to note that US stocks seem to be losing steam, possibly on that treasury yield rise (I have switched to indicating yields on 10y and 2y)
  • Bitcoin the night’s big winner in percentage terms.

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