If you’re reading this, the world didn’t come to an end last night with the U.S. election. However, underdog real estate mogul and reality TV star Donald Trump appears to have secured the presidency by capturing more than 270 electoral votes. Whether it was a late rally or systematic polling error, in the end, the Republicans will take back the White House in a surprise victory. Reminiscent of the Brexit vote, but on a much larger scale, a populist uprising has defeated the status quo.
Down ballot, the U.S. House of Representatives predictably remained in Republican control. As of this writing, it appears the Republicans have also narrowly retained control of the U.S. Senate.
The Markets
Global capital markets are feeling the weight of the U.S. vote and have gone “risk off” in a big way. As of this writing, S&P 500 and Dow Jones Industrial Average futures are down 4% and 3%, respectively. Futures on the Euro Stoxx 50 are down 4% while the Nikkei 225 is down over 5% in Asia. Bond are rallying with yields down in U.S. Treasuries from 5 to 10 bps across the belly of the curve. Unlike most flight-to-quality rallies, the broad U.S. Dollar Index is actually down just over 1% as investors trim dollar-based assets. Gold is up over 3% and the Mexican peso, considered a bellwether for Trump’s chances of success, is off a stunning 9%.
(Continues …)
