JPMorgan Chase said the stock market has begun to price in a Trump victory, and possibly even a Republican sweep. The recent rally in U.S. stocks to record highs, with U.S. bank stocks in particular outperforming, is a sign that investors are betting that former President Donald Trump will win the November election, following a similar pattern to 2016. market strategist Nikolaos Panigirtzoglou wrote on Wednesday. Look at the Dow Jones Industrial Average, which recently crossed the 43,000-point milestone for the first time, or the S&P 500, which crossed 5,800 points. At the same time, the U.S. banking industry has also rebounded, and the Trump administration is expected to subject these banks to less regulatory scrutiny than under the Biden administration. The SPDR S&P Regional Banking ETF (KRE) is up 5.9% this month alone, with financials being the best-performing S&P 500 sector this month. Similar signs are emerging in other parts of the market. The U.S. dollar index has risen to its highest level since August. U.S. Treasury bond yields continue to rise, with the 10-year Treasury bond yield exceeding 4%. “The market has now begun to price in a Trump deal,” London’s Panigirzoglu wrote. Past month KRE 1M mountain SPDR S & P Regional Banking ETF. To be sure, recent moves in banks, the dollar and bond yields have been milder than in 2016, Panigirtzoglou said. “Since the start of the 3-month pre-election window in early August, we have seen relatively modest moves so far: 5-year UST yields are flat, DXY is down 1%, and U.S. equities have outperformed relative to non-U.S. equities Equities 2%, Bank of America credit spreads tightened 15 basis points versus SPX,” Panigirtzoglou wrote. “This means that the likelihood of a Trump victory is significantly higher than two weeks ago, when we noted a 60 basis point decline in 5-year UST yields, a ~3% decline in DXY, and U.S. equities trading at par with non-U.S. Banks underperformed, credit spreads were flat, “but still a long way from fully pricing in the 2016 experience (5-year UST yield increased 100 basis points, DXY gained 8% cumulatively, and US equities outperformed). Non-U.S. equities 6%, U.S. banks outperformed the S&P 500 15%), and U.S. HG corporate credit spreads tightened 40 basis points),” he added. Meanwhile, Republicans sweeping both houses of Congress and the White House, while not yet fully integrated into the market, are expected to eventually support Bitcoin and gold prices, he said. .DXY 1M USD Index over the past month.
