The recent shooting incident involving former President Donald Trump has sent shockwaves across the United States, global markets, and political arenas worldwide.
The initial response to the event has been a surge in the value of the US dollar and a drop in Treasury yields, as traders adjust their positions in anticipation of a potential Trump victory in the upcoming presidential elections.
According to experts’ analysis, investors have been buying US dollars and Bitcoins while selling longer-term US Treasury bonds, known as the “Trump-victory trade.” This reaction is fueled by the belief that the assassination attempt could boost Trump’s chances of reclaiming the White House, especially in a campaign where his opponent, Joe Biden, was already facing challenges within his own party.
The shooting incident has set the stage for a possible return of Trump to the political spotlight, with Republicans seen as favoring more flexible fiscal policies and potentially higher tariffs.
This stance could benefit the US dollar but lead to a weakening of Treasury bonds, as reflected in the rise in yields following Biden’s lackluster debate performance last month.
Market strategists like Charu Chanana from Saxo Capital Markets suggest that a Trump resurgence could bolster the US dollar while putting pressure on currencies like the Mexican peso and the Chinese yuan.
The shift in market dynamics could favor certain sectors, such as companies benefiting from lower corporate taxes and less stringent regulations.
The impact of the shooting incident is not limited to currency and bond markets.
Stocks of South Korean defense and nuclear energy companies have also seen gains, reflecting the interconnected nature of global politics and markets.
Additionally, the price of Bitcoin surged above $62,000 on Monday, partly due to Trump’s growing interest in the cryptocurrency industry to appeal to voters.
As the US election campaign unfolds, experts anticipate more surprises in the coming months.
The upcoming speech by Federal Reserve Chairman Jerome Powell is another event that could influence market sentiments, potentially hinting at a rate cut in September.
The combination of political developments and monetary policy decisions is likely to keep investors on edge as they navigate the uncertainties ahead.
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