Financial markets nailed the 2024 election
Traders were never given much of a reason to question their knee-jerk reaction to the early US election results.
Very early into election night, traders made their call.
And surprisingly — at least for anyone who’s tracked the past few presidential races — they seemingly got it right immediately.
No circuit breakers to the downside like the initial knee-jerk reaction to Trump’s surprise win in 2016, nor a constant back-and-forth like 2020 as the incoming results careened from being in Trump’s favor toward Biden.
After 9 p.m., Florida’s results were pointing to a very decisive win for Trump in the Sunshine State. Traders, looking at that early margin of victory and success in counties with a substantial Puerto Rican population, extrapolated that success nationwide. They were never given much of a reason to question that initial take.
Treasury yields, US equity futures, and the US dollar all surged in tandem in a highly correlated cross-asset move.
Shortly after 10:30 p.m. ET, 10-year Treasury yields broke above 4.45% to reach their highest levels since July 3. That put them on track for their second-biggest daily advance of 2024, trailing on the release of March’s surprisingly hot CPI inflation report. And that daily jump related to the November 6 session — but we hadn’t even passed midnight yet.
Yields did retrace somewhat lower from then until a little past midnight, which coincided with prediction markets pricing in a scenario in which Trump won the presidency and Republicans controlled the Senate, but the Democrats would recapture the House. That was seen as somewhat of a check on any of Trump’s potential tax and spending ambitions.
This morning, the House has not yet been conclusively called. But prediction markets are overwhelmingly expecting a full red wave now, with Republicans controlling all of the legislative branch as well as the executive branch. Treasury yields, accordingly, crescendoed to fresh four-month highs earlier this morning and are on track for their biggest one-day surge since September 2022.
