The Trump trade is gaining momentum as betting odds increased that Donald Trump might win the US presidential election in November following an assassination attempt. Early on Monday, the dollar strengthened, Treasury futures declined, the Mexican peso weakened, and Bitcoin surged. These movements reflect market speculation that a Republican return to the White House could lead to tax cuts, higher tariffs, and looser regulations.
Keir Starmer’s Labour Party has secured a victory in the UK general election, achieving a significant parliamentary majority now votes have been fully tallied. This outcome marks a dramatic shift in British politics following the collapse of Rishi Sunak’s Conservative Party. Labour reached the critical threshold of 326 seats in the House of Commons just before 5 a.m. on Friday and ultimately won 411 out of 650 seats, the largest margin since Tony Blair’s landslide victory in 1997. The Conservative Party, in contrast, managed to secure only 121 seats.
In the recent presidential debate, President Joe Biden’s faltering performance, marked by blunders and misstatements, raised concerns about his age and ability to compete against Donald Trump.
May proved to be a decent month for both equity and bond market returns which were boosted by improving economic conditions coupled with anticipation of interest rate cuts by the Bank of England (BOE) and the Federal Reserve (FED) later this year. There were some exceptions with small losses in Japanese equities and Global Government bonds however most of this was attributed to currency moves as Sterling rallied against most other developed currencies.
The Bank of England decided to maintain its benchmark interest rate at 5.25%, but the meeting minutes hinted at a potential shift towards easing, with some members of the Monetary Policy Committee expressing a leaning towards rate cuts soon. This triggered market movements, pushing the probability of a rate cut in August above 50%. Governor Andrew Bailey’s remarks leaned towards a dovish stance, emphasising the significance of recent economic data.
The French bond market experienced increased volatility due to political uncertainty. French securities declined on Thursday amid concerns that Marine Le Pen’s National Rally party might implement looser fiscal policies if it wins the upcoming elections. This has caused a significant rise in the spread between French and German debt yields, reaching levels not seen since the European debt crisis in 2011.
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