By Wayne Cole
SYDNEY (Reuters) – U.S. stock futures and the dollar rose in Asia on Wednesday as investors bet that Republican Donald Trump could win the U.S. presidential election, although the race officially remained too close to call.
Trump took an early lead over Democrat Kamala Harris, as solid Republican-leaning states first reported, but the handful of states likely to decide the election were unlikely to see crucial battleground contests.
Treasury yields shot to a four-month high as some betting sites heavily favored Trump, while The New York Time’s closely watched swingometer predicted an 89% chance he would win.
Analysts generally believe that Trump’s plans for limited immigration, tax cuts and sweeping tariffs, if implemented, would put more upward pressure on inflation and bond yields than Harris’ center-left policies.
Trump’s proposals would also cause the dollar to rise and potentially limit how far U.S. interest rates can ultimately be cut.
While markets were still confident that the Federal Reserve would cut rates by 25 basis points on Thursday, futures for next year were in the red with a December decline of 9 ticks.
“As the first results come in, even if they are not that surprising, we see government bond yields rising a bit, the dollar strengthening and bitcoin rising; a kind of classic Trump transaction,” said Brian Jacobsen, chief economist at Annex. Asset management.
The yield on 10-year government bonds rose from 4.279% to a four-month high of 4.471%, breaking last week’s peak of 4.388%. The two-year interest rate rose from 4.189% at the end of New York to 4.291%. [US/]
“If we look at the long end of the curve, it reflects the fact that both candidates are not exactly fiscally conservative, they are both willing to use the fiscal printing press,” said Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions. .
“The biggest issue is whether Trump or Harris will get full mandates,” he added. “If they don’t get blue or red sweeps, it limits the fiscal damage, and that’s the best outcome for bondholders.”
YUAN BUCKLES
S&P 500 futures and Nasdaq futures both rose 1.3% as Wall Street looked to promised tax cuts and less corporate regulation.
European stocks were less enthusiastic because Trump’s tariff policy, if implemented, could spark a global trade war and threaten EU exports.
EUROSTOXX 50 futures lost 0.7%, while DAX futures fell 0.5% and FTSE futures settled flat.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.8%, while Japan’s Nikkei rose 2.3% as the yen fell. [.N[]
