With only seven trading days left before the U.S. election results are revealed, the U.S. election is taking center stage, while uncertainties around Japan’s parliamentary elections and China’s NPC meeting are also set to resolve soon. Recently, the global markets have been impacted by the rise in the U.S. 10-year Treasury yield to 4.2%, up by 70 basis points from recent lows. This has pressured the prices of global securities, commodities, and highly liquid assets like digital currencies. Particularly in Asia, Japan and India saw substantial pullbacks, highlighting a critical issue: the significance of a 4.2% yield on the 10-year Treasury. Breaking it down, if we adjust for 2% inflation, this yield reflects a 2.2% long-term economic growth expectation—well-aligned with the IMF’s latest 2025 U.S. economic growth forecast of 2.2%. Though this projection doesn’t deeply account for the effects of a Trump or Harris administration, it suggests that the U.S. economy will maintain resilience regardless of the outcome. Additionally, the fact that U.S. short-term Treasury yields haven’t risen as sharply as the 10-year yield suggests that growth, rather than inflation, remains a central concern.
Outlined below are the key economic policies of Trump and Harris and the corresponding trading logic:
Trump:
1. Increase tariffs to incentivize manufacturing reshoring
2. Tax cuts
3. Boost traditional energy supply to curb inflation
4. Invest in traditional infrastructure
5. Limit government spending, establish efficiency departments, and reduce government size
6. Deport undocumented immigrants
7. Advocate for low interest rates
Harris:
1. Tax the wealthy
2. Subsidize small businesses
3. Implement legal measures to control consumer prices
4. Increase housing supply via fiscal subsidies
5. Support the Federal Reserve’s independent policy actions
Opinions on the comparative merits of Trump and Harris’s economic policies vary, but consensus holds that either administration is likely to significantly expand fiscal spending. Currently, the rising odds of a Trump victory have driven up digital currency and Treasury yields, with markets anticipating stronger inflation and economic growth under Trump. Key to Trump’s success would be effectively controlling government spending and fiscal deficits, a crucial market risk factor. While Trump’s policies could boost economic vitality, inflation remains a critical concern. If Musk’s potential involvement in efficiency reforms leads to a downsized government and reduced spending, inflation-sensitive assets—commodities like gold, silver, and oil, digital currencies, and short-term Treasuries—may decline. These assets are at pivotal price levels, with the market awaiting clearer direction. Successfully controlling inflation could also enhance equity performance. Conversely, a Harris administration may accelerate risk evolution, as she is committed to the Fed’s inflation control mandate, likely continuing current trends with potentially swift market adjustments.
In terms of economic growth, tariffs’ specific impact remains debatable, but they would likely hamper globalization while encouraging the return of U.S. manufacturing. If Trump wins, potential investment focuses include energy (nuclear), small-to-mid-sized manufacturing (Russell 2000), sectors exempt from tariffs (financials, local services), tech (Apple, semiconductors, chipmakers), and digital currencies. Under Harris, possible areas to watch would include Treasuries (on receding inflation expectations), Asian markets (with a weaker dollar), real estate, and retail (e.g., Walmart).