US bond futures slipped and the dollar firmed on Monday as investors speculated that the recent attack on US presidential candidate Donald Trump could increase his chances of winning, adding a new level of political uncertainty to the markets.
A holiday in Japan led to thin trading conditions, with the dollar seeing a modest rise and Treasury futures slipping. Investors have typically responded to the possibility of a Trump victory by pushing Treasury yields higher, anticipating that his economic policies could lead to inflation and increased debt.
Proposals to impose tariffs on imports could drive prices up and reduce consumer spending power. Additionally, restrictions on migration might tighten the labor market and push wages higher.
Market analysts predict that a Trump presidency could result in a stronger US dollar and a steepening of the US Treasuries curve. Online betting site PredictIT currently gives the Republicans a 66-cent chance of winning, compared to the Democrats’ 38 cents.
The dollar edged up against the Japanese yen, while the euro slightly eased. Futures for 10-year Treasuries slipped, and S&P 500 and Nasdaq futures were marginally higher.
In China, disappointing data was released ahead of a key meeting of top officials. Second-quarter growth was lower than expected, putting pressure on Beijing to introduce support measures. The yuan weakened against the dollar, and mainland stocks fell.
The US is set to release data on retail sales, industrial production, housing starts, and jobless claims. Markets are anticipating a rate cut by the Federal Reserve in September, while the European Central Bank is expected to hold rates steady this week.
Various companies, including Goldman Sachs, BlackRock, and Netflix, are reporting earnings. In commodity markets, gold prices remained steady, while oil prices inched up following signs of progress in a ceasefire between Israel and Hamas.
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First Published: Jul 15 2024 | 8:40 AM IST