The bond market has been selling off steadily today, which reads like a Trump trade. At the same time, the stock market has been selling off steadily after opening higher and is down on the week.
So what gives? Surely there are some people making election bets but real money knows better. Elections are very tough to predict.
I think we all remember the polling errors in 2016 and 2020 but here is a reminder from Bespoke of what the polls looked like in 2012, which ended up being a 4-point win for Obama and 332-206 in the electoral college.
The kicker here is that betting markets had Obama as a decided favorite, even in the final week as the polls tightened. Right now, betting sites are at about 60:40 for Trump.
As I often say: There is always another trade. Politics and betting on binary outcomes is a tough way to make money in markets. All the best trades on the election are going to be after the results are clear, just like in the last two elections.
This article was written by Adam Button at www.forexlive.com.