MAGA Money Moves
Trump's dollar
DXY squeezing big, trading well above the most recent highs. The BIG resistance comes in around the 106 area. This is the range highs (although we have overshot it twice since late 2022).
Source: Refinitiv
Make or break
Soggy euro is approaching the lower part of the big range. Make or break for poor euro coming up. 1.065/1.06 is huge.
Source: Refinitiv
Dollar to 1.05
"While at the time of publication the result is not yet confirmed, polling forecasts suggest a Trump victory is likely. We are holding on to our long-standing short EUR/USD view given the asymmetric dollar positive risks we have been highlighting throughout this year and we move our year-end EUR/USD forecast down to 1.05." (Deutsche Bank FX)
MAGA rates
The 10 year is pushing above the big negative trend line that has been in place since late last year. 4.4%, give or take, is the area to watch. The 10 year is up over 80 points from mid September. When does it start to hurt?
Source: Refinitiv
That rates stress
Stubborn MOVE needs a proper reset...Note the chart has the VIX updated with the first post Trump win prints.
Source: Refinitiv
Rates and equities
Equities do not care about rates these days...but is there a level where they start to care?
Source: Refinitiv
Small cap's big gap
Some Trump trades really going for the extreme...Russell futures vs the 10 year trading with a gap not seen in ages.
Source: Refinitiv
The case for RTY
The RTY tends to significantly outperform the SPX following the conclusion of US presidential elections, and especially into YE. As we show below, average ex-recession performance from over the following ~8W is a monster 7%. Especially given the strong underlying economic backdrop and Fed shift toward lower rates, we think this could be one of the more compelling opportunities once the event is behind us.
Source: Jefferies
Russell mania
Russell is already up some 8.5% in 3 sessions and RSI already very overbought...although this is a huge break out move.
Source: Refinitiv
and it's gone
VIX resetting big time, closing the short term election "gap" vs SPX.
Source: Refinitiv
VIX around the last eight elections
Interestingly, the VIX tends to go into US elections fairly elevated. The current reading of ~22 is right at home with the average of 24. The volatility gauge also tends to drop precipitously post-election. In all but one example (the GFC, naturally), the VIX was lower by the following Friday. While the average drop of 1.25pts seems meager, ex-GFC its over 4pts.
