The U.S. dollar surged and Treasury futures declined as investors heightened their bets on a potential Donald Trump victory in the upcoming presidential election following an assassination attempt. The greenback appreciated against all Group-of-10 currencies, while futures indicated a rise in Treasury yields as European cash trading loomed. These market moves reflect expectations that a Trump administration would likely implement looser fiscal policies and higher tariffs, factors traditionally seen as boosting the dollar while putting pressure on Treasuries.
Monday’s market action comes on the heels of a pivotal week in the Federal Reserve’s ongoing battle against inflation. Recent economic reports have strengthened market expectations for two interest rate cuts in 2024. Both Fed Chair Jerome Powell and San Francisco Fed President Mary Daly are slated to speak later on Monday, with investors keenly awaiting any signals regarding future monetary policy directions.
Traders are also closely monitoring the Third Plenum, a significant meeting of China’s top leadership set to commence on Monday. The focus will be on potential policy support measures as the Chinese economy recorded its slowest growth in five quarters.
Metals, including iron ore and copper, saw gains amid the release of soft economic data, buoyed by expectations that China will announce new stimulus measures. Market analysts suggest that the weak economic figures create a favorable backdrop for the Third Plenum to introduce more supportive policies aimed at bolstering the economy.