Investing.com — Recent weeks have seen a shift in polling towards a potential Donald Trump victory in the ongoing presidential race, despite the most recent data indicating a tightening race.
According to JPMorgan strategists, investor sentiment suggests that financial markets may revisit the dynamics experienced during the 2016 election.
While equities could see a “knee jerk bounce” in the event of a Trump win, echoing the pattern observed in 2016, the continuation of any upward movement would likely “depend on the magnitude of the bond yields response, as well as on whether the initial focus will be trade, or the economy/taxes,” strategists said in a note.
They highlight that current investor positioning is significantly different compared to November 2016. Today, positioning is at elevated levels, whereas it was more subdued back then. Additionally, fiscal balances have weakened since that time.
The note points out that unlike in 2016, when Trump’s win and the subsequent market reaction caught investors off guard, a Trump victory is now widely anticipated, and investors are already positioned long in equities. This could limit the potential for a significant market…
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