Trump comeback drives gains in US stocks and dollar, Treasuries slide

Donald Trump’s victory in the U.S. presidential election unleashed a massive rally in the dollar, drove stocks to record highs and punished bond prices as expectations of tax cuts and tariffs on imports drove optimism about economic growth while fueling worries about inflation.

U.S. equity indexes soared, with the benchmark S&P 500 up 2.51% to a record high and huge gains in areas such as small-cap stocks and banks that are poised to benefit from Trump’s expected lighter regulatory touch.

The dollar hit its highest level in over four months. Bitcoin hit record highs and Treasuries were battered.

“Everywhere you look, there’s the thumbprints of these election results for markets,” said Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute.

Trump’s pledges to raise tariffs, cut taxes and slash regulations encouraged investors to dive into a range of assets that looked likely to benefit from such policies.

Markets that could suffer under tougher tariffs bore the brunt of the sell-off. The Mexican peso slumped to its lowest level in over two years while the euro was set for its largest daily drop since 2020.

Currency trading was intense.

CME Group (CME.O), opens new tab said by 10 a.m. CT, online trading of the Offshore Chinese Renminbi already had hit $33 billion in notional value, an all-time high. In the same time span, the traded notional value of futures contracts on the Mexican peso was 43% above the average daily volume.

Bolstering confidence in “Trump trades,” Republicans won control of the U.S. Senate. Investors were still awaiting results in the House of Representatives, and Republican control would clear the path for Trump’s agenda.

The election could have far-reaching implications for tax and trade policy, as well as U.S. institutions, affecting assets globally.