Deutsche Bank: Slight Increase in Expectations for Trump's Victory, but Market Pricing Remains Cautious

ChainCatcher message, Deutsche Bank stated that despite recent polls leaning towards a Trump victory, market pricing remains cautious. Although there is discussion in the market about the "Trump trade," the extent of market pricing for a Trump victory is still quite cautious.

Deutsche Bank illustrates this through the dollar in the foreign exchange market and a basket of S&P 500 companies that are most sensitive to tariffs. They believe that the euro to dollar exchange rate fell from 1.12 to 1.09 mainly due to a repricing of expectations for the Federal Reserve following the release of strong U.S. employment data. They also pointed out that the stock prices of the basket of S&P 500 companies sensitive to tariffs have been trading sideways, only recently starting to perform poorly, which aligns with the recent polling trends. Deutsche Bank wrote, "The market has begun to price in an increased probability of a Trump victory, but the extent of this impact on market pricing remains quite small."