Trump Trade Resurfaces as Markets Price In Potential Second Term

Donald Trump has recently experienced a surge in momentum, increasing his likelihood of winning a second presidential term. This shift has reignited the "Trump trade" in financial markets, impacting various sectors like stocks, bonds, and interest rates.

Trump`s resurgence began with a perceived decline in Biden`s performance, leading some Democrats to question his candidacy. Trump has since consolidated his position within the Republican party and adopted a more moderate stance to appeal to a broader range of voters and business leaders. He has attempted to reassure investors, suggesting continuity in economic policy and personnel, including potentially retaining Jerome Powell as Federal Reserve Chair.

Consequently, investors are increasingly focused on the potential for a Trump victory and a Republican-controlled Congress, which could lead to further corporate tax cuts. This anticipation has influenced market trends, with investors shifting from tech stocks to smaller companies expected to benefit more from such tax cuts. Betting markets now favor a Trump win, further fueling these market shifts.