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Treasury Yields Soar, Dollar Strengthens as Trump’s Election Momentum Shakes Markets

4 weeks ago

Treasury yields surged and the dollar posted its largest gain since February 2023 as Donald Trump’s strengthening election outlook spurred decisive moves across financial markets. U.S. stock futures extended gains, reflecting investor anticipation that a Trump administration could drive a stronger dollar through pro-growth initiatives, higher interest rates, and possible tariffs that collectively create a favorable backdrop for the greenback. In contrast, markets see a Harris presidency as potentially weighing on the dollar amid anticipated shifts toward higher taxes and tighter regulatory policies.

While the election is dominating market headlines, analysts urge investors to maintain focus on underlying economic fundamentals. U.S. economic data and corporate earnings continue to outperform, with the Fed positioned to keep policy supportive, potentially cutting rates again in its upcoming meeting. Despite election-driven volatility, most U.S. equities remain attractively valued, and the central bank’s accommodative stance is expected to cushion any near-term uncertainties.

Investors recognize a preference for Trump’s policy approach, which favors lower taxes and lighter regulation. However, even with a Harris victory, analysts caution that political gridlock might temper the impact of any new administration’s agenda, curbing the likelihood of sweeping legislative changes. Markets are expected to watch for any shifts in the balance of power, which could shape the administration’s influence on fiscal and regulatory policy over the next term.

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