Corners of financial markets that could feel the impact of a Donald Trump victory are stirring again, as the U.S. presidential race tightens with less than three weeks until Election Day.
Assets ranging from small-cap stocks to bitcoin have climbed in recent weeks while the Mexican peso and Treasuries have slipped, as polls show a tight race between Republican candidate Trump and his Democratic opponent, Vice President Kamala Harris.
The moves echo the so-called Trump trades from earlier this year when he pulled ahead of President Joe Biden, only to fade after Biden withdrew.
Harris led Trump by a marginal 45% to 42% in a Reuters/Ipsos poll released on Tuesday, a tighter race than the same poll showed several weeks earlier.
Trump has taken the lead in online prediction markets such as PredictIt and Polymarket. Polymarket last favored him 61% to 39% over Harris.
Trump’s gains on Polymarket might stem from a group of four Polymarket accounts that have collectively spent about $30 million worth of cryptocurrency on bets that he will win, the Wall Street Journal reported on Friday. Polymarket did not immediately respond to a request for comment.
Investors caution, however, that linking the investment moves to Trump this time is more difficult, as many can also be tied to rising economic optimism following a blowout U.S. jobs report this month and a 50-basis-point interest-rate cut from the Federal Reserve last month.
“Some of this certainly could be being driven by Trump’s improved position in the predictive markets,” said Steve Sosnick, chief strategist at Interactive Brokers.
Due to strong economic data, however, “it’s really hard to separate cause from effect, much less separate different causes,” he said.
Among the biggest gainers are shares of Trump Media & Technology Group (DJT-Q), the former president’s media company, which have broadly tracked Trump’s fortunes in polls and online prediction markets since its listing this year.
Shares are up more than 140% since Sept. 23.
“It’s the trade that is most levered to Trump’s election prospects,” Sosnick said.
Other beneficiaries include private prison operators Geo Group (GEO-N) and CoreCivic (CXW-N), whose shares have risen about 18% and 10%, respectively, this month. Trump has promised to crack down on illegal immigration, which could boost demand for detention centers.
The small cap-focused Russell 2000 is up 4% since Oct. 10 and trades near its highest level since late 2021. Expectations that Trump will keep taxes low and reduce regulation have boosted shares of smaller companies, though analysts believe they are also benefiting from greater confidence in the economy.
In foreign-exchange markets, Trump trades are visible in the dollar’s rebound against a range of currencies, particularly the Mexican peso, strategists said.
The peso, seen as vulnerable to new tariffs Trump plans to impose, is down 4% from its September high. MSCI’s gauge for Latin American currencies .has slipped over 3% during that period.
“Implied volatility in the dollar-peso pair has been ratcheting up in line with Trump’s gains in betting markets,” said Karl Schamotta, chief market strategist at payments company Corpay in Toronto.
Trump said on Sunday he would slap tariffs as high as 200% on vehicles imported from Mexico.
The former president’s economic policies are seen as growth-friendly and a catalyst for inflation, two factors that could translate to higher Treasury yields, which move inversely to bond prices, and a stronger dollar.
The dollar index, which measures the greenback’s strength against six major currencies, has risen more than 3% since late September, as investors price in a shallower trajectory for interest-rate cuts. Some of its gains, however, are likely related to greater confidence of a Trump win, wrote Thierry Wizman, global FX & rates strategist at Macquarie.
Improved betting-market odds for Trump, who has positioned himself as pro-cryptocurrency, appear to be lifting bitcoin. The world’s largest cryptocurrency is up 12% since Oct. 10, a rally that Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors, attributed to rising confidence in a Trump victory.
“If Trump secures a second term, the regulatory-risk-driven discount applied to crypto would likely shrink to near-zero, and investors would need to price in the possibility, however small, of the government adopting a strategic bitcoin reserve,” he said.
In government bond markets, some investors believe Trump’s improved standing has spurred a rise in the 10-year term premium - a measure of the compensation investors demand to hold long-term government debt securities - on concerns that the former president’s proposals for lower taxes could increase the budget deficit.
A New York Fed gauge measuring term premium turned positive last week for the first time since July. The move has come amid a broader rise in Treasury yields.
Part of the reason for those moves are expectations of a Trump win, said Matt Eagan, portfolio manager and head of the full discretion team at Loomis, Sayles & Company.
Still, not everyone interprets these market moves as bets on a Trump victory.
“I think the election mostly remains as a toss-up,” said Sonu Varghese, global macro strategist at Carson Group. “The story is really one of stronger economic growth and a supportive Fed.”
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