Dollar drops as some US polls shift toward Kamala Harris: Markets Wrap
The dollar dropped and US Treasuries rallied as investors walked back bets on Donald Trump winning the presidential election after weekend polls indicated Kamala Harris was gaining ground.
Monday’s moves are undoing some of the gains in the dollar and Treasury yields after investors had ramped up wagers on a second term for Trump.
An index of the greenback dropped the most in six weeks. Ten-year Treasury yields fell 10 basis points to 4.28%. The Mexican peso — which tumbled in the aftermath of Trump’s 2016 victory — was among the top performing major currencies tracked by Bloomberg.
Harris received some encouraging signals from an ABC News and Ipsos poll giving her a 49%-46% edge nationally against Trump in the race for the White House. Other surveys showed the two candidates poised for a photo finish, with voters narrowly split both nationally and across the pivotal swing states.
“Somehow markets persuaded themselves that Trump was well ahead and had been priced as if it was quite a clear victory for him, which seems crazy,” Erik Nielsen, chief economics adviser at UniCredit SpA, told Bloomberg TV. “What you’re seeing now is a realization that we got ahead of ourselves.”
S&P 500 futures were little changed while Nasdaq 100 contracts slipped. Nvidia Corp. rose 1.5% in early trading on news that it will replace Intel Corp. in the Dow Jones Industrial Average. Intel dropped 1.7%.
Monday’s moves are undoing some of the gains in the dollar and Treasury yields after investors had ramped up wagers on a second term for Trump. The argument goes that his support for looser fiscal policy and steep tariffs will deepen the federal deficit and fuel inflation, pushing up interest rates to the detriment of Treasuries but the benefit of the dollar.
Among a flurry of polls, a survey by the Des Moines Register pointed to a lead for Harris in Iowa — a state that Trump has won in both of his previous contests. While the survey was likely an outlier, it served to underscore the ever-shifting dynamics of the race.
“The Trump trade has moved so fast,” said Citigroup Inc. strategist Beata Manthey. “Investors are in a sit-and-wait mode so they’ll take action once we have the results.”
In addition to the US election, trading across financial markets this week will also be shaped by central bank decisions for the US, UK and Australia, among others.
The Federal Reserve is expected to cut rates by 25 basis points Thursday, while the Bank of England is seen to lower its benchmark rate by a quarter point to 4.75%.
Oil, Gold
West Texas Intermediate, the US crude benchmark, rose almost 3% on Monday as OPEC agreed to push back its December production increase by one month and Iran escalated its rhetoric against Israel.
In China, the top legislative body reviewed a proposal to move some local governments’ off-balance-sheet debt onto their official accounts, a highly-anticipated move to ease their financial burden that has been foreshadowed by officials.
Key events this week:
US factory orders, MondayEurozone HCOB Manufacturing PMI, MondayAustralia rate decision, TuesdayChina Caixin Services PMI, TuesdayIndonesia GDP, TuesdayPhilippines CPI, TuesdaySouth Korea CPI, TuesdayUS trade, ISM Services index, TuesdayUS Presidential Election, TuesdayBrazil rate decision, WednesdayNew Zealand unemployment, WednesdayPoland rate decision, WednesdayTaiwan CPI, WednesdayVietnam CPI, trade, industrial production, WednesdayECB President Christine Lagarde speaks, WednesdayChina trade, forex reserves, ThursdayEurozone retail sales, ThursdayMexico CPI, ThursdayNorway rate decision, ThursdayPeru rate decision, ThursdaySweden rate decision, CPI, ThursdayUK BOE rate decision, ThursdayUS Fed rate decision, initial jobless claims, productivity, ThursdayBrazil inflation, FridayCanada employment, FridayChile CPI, FridayTaiwan trade, FridayUS University of Michigan consumer sentiment, FridayFed Governor Michelle Bowman speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:53 a.m. New York timeNasdaq 100 futures fell 0.2%Futures on the Dow Jones Industrial Average were little changedThe Stoxx Europe 600 rose 0.1%The MSCI World Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.6%The euro rose 0.6% to $1.0904The British pound rose 0.3% to $1.2962The Japanese yen rose 0.8% to 151.79 per dollar
Cryptocurrencies
Bitcoin fell 0.3% to $68,906.63Ether rose 0.2% to $2,473.14
Bonds
The yield on 10-year Treasuries declined 10 basis points to 4.28%Germany’s 10-year yield was little changed at 2.40%Britain’s 10-year yield was little changed at 4.45%
Commodities
West Texas Intermediate crude rose 2.8% to $71.42 a barrelSpot gold rose 0.2% to $2,743.20 an ounce
