Investment bank Citi predicts a 5% jump in the dollar and a selloff in bond markets if a Donald Trump-led Republican Party wins the U.S. election in November. Citi’s analysts base this projection on historical trends, noting a similar 5% surge in the dollar after Trump’s unexpected victory in 2016 and a decline of around 5% before the 2020 election when Trump was defeated by Joe Biden.
The analysts suggest that a potential 5% increase in the dollar is reasonable if Trump secures the White House and Republicans control both chambers of Congress, terming it a “Trump victory with a red wave.” Citi anticipates a pattern similar to 2020, with the high in the dollar potentially occurring right around the election night.
A Republican sweep, according to Citi, could impact bond markets due to potential policy shifts such as new tax cuts, stimulus measures, and trade tariffs, particularly targeting China. These changes could introduce volatility and uncertainty into financial markets, influencing investor behavior and asset valuations.
Citi’s prediction comes amid escalating political tensions and speculation about the upcoming U.S. election, raising questions about the potential economic implications for both the United States and global markets. Citi also notes potential effects on interest rates and the yield curve, anticipating “higher rates and a steeper yield curve and higher term premium” in the event of a Republican sweep.
