AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Markets react to recent poll favoring Kamala Harris in Iowa.
- US dollar and 10-year Treasury yields experience notable changes.
- Bitcoin dips as investors adjust to shifting election expectations.
Recent polling data has driven a shift in market sentiment, as investors respond to Vice President Kamala Harris’s lead in Iowa over former President Donald Trump. Following the latest Des Moines Register/Mediacom poll, showing Harris with a slight advantage in the traditionally Republican state, financial markets are adjusting positions that previously supported a Republican win.
The US dollar index slipped to a two-week low of 103.58, while the yield on 10-year Treasuries dropped by up to 12 basis points, reaching 4.26%. Bitcoin, which has seen support from Trump's pro-cryptocurrency stance, also declined in value, reflecting market adjustments to this potential shift in political outlook.
For some investors, Iowa's swing signals broader implications for nearby swing states like Wisconsin, where outcomes could be pivotal. According to Tapas Strickland, head of market economics at National Australia Bank, “If you’re seeing a swing in Iowa, it could signal a broader trend, and markets are reacting accordingly.” He noted that changes in traditionally Republican states may have implications for the broader national outcome, adding to market speculation.
Since October, US bond yields have risen by more than 50 basis points amid expectations tied to Trump’s potential return, as his policies on tax cuts and tariffs are considered inflationary. Supporting this trajectory was robust US economic data, which some believe could prevent aggressive rate cuts by the Federal Reserve.
JPM from JPMorgan assessed that 21 basis points of the rally in 10-year yields were based on anticipation of a Republican win. Francis Diamond, rate strategist at JPMorgan, mentioned that an additional rise in yields could occur if this expectation holds, although a Harris presidency may cause yields to ease, especially under a divided government scenario.
Currency markets also witnessed notable moves, as the US dollar weakened against multiple currencies, while the Mexican peso surged by 1.6%. Given Trump’s tough stance on tariffs, the peso’s gain indicates reduced anticipation of adverse trade impacts on emerging markets should Harris win.
Crypto markets saw Bitcoin trading lower at around $68,300 after approaching a yearly high, reflecting recalibration amid changing election forecasts. With polls indicating a close race, Strickland cautioned that markets could face volatility, especially if a contested election unfolds.
Overall, markets appear to be balancing between potential outcomes, with shifts in assets like the US dollar, Treasury yields, and Bitcoin reflecting cautious recalibration.
