<p>London: Analysts at investment bank Citi have predicted a 5 per cent jump in the dollar and a selloff in bond markets if a Donald Trump-led Republican Party clean sweeps the US election in November.</p><p>Their estimate was predicated partly on the fact the dollar rallied around 5 per cent after Trump's surprise election win in 2016, but also lost roughly 5 per cent ahead of the 2020 vote when Trump lost out to current Democratic President Joe Biden.</p><p>"We suspect +5 per cent is the right amount of potential dollar strength to attribute to a Trump victory with a red wave," the bank's analysts said, referring to if Trump wins the White House and Republicans win both chambers of Congress. Trump is the likely Republican nominee for the November 5 election.</p><p>The analysts also predicted a similar pattern to 2020 when the greenback had completed most of its move by election night due to the way markets traditionally preempt outcomes.</p><p>"Therefore, we would expect the high in the dollar - potentially for the year - could very well be seen right around the election," they said.</p><p>A Republican sweep would also have the biggest impact on bond markets as it would likely result in new tax cuts, stimulus and trade tariffs on rivals like China.</p>.Donald Trump set to win Nevada's delegates after Haley humiliation.<p>That could lead to "higher rates and a steeper yield curve and higher term premium," Citi said, likening it to the bond market selloff in October when markets were also worrying about the rise in US debt.</p><p>"Long forward vol(alitity) on long-dated forward rates can be a carry friendly hedge for a Republican-sweep scenario, given that the long-dated vol has been trading directionally with the forward rates," the bank's analysts said.</p><p>Wall Street's election focus, meanwhile, is likely to be what happens to taxes.</p><p>Citi's assumption is that Trump would prioritise extending the current income tax regime as well as potentially layering on further corporate tax cuts.</p><p>They estimated, however, that a "clean extension" of cuts currently due to expire would add more than $3 trillion to the US government's deficit over the next 10 years.</p><p>"There is a question as to whether the Republicans will be comfortable adding trillions to the deficit under their control, particularly considering a one-term president," Citi said, adding that while Biden might also extend tax cuts, he may also raise some corporate taxes.</p>
<p>London: Analysts at investment bank Citi have predicted a 5 per cent jump in the dollar and a selloff in bond markets if a Donald Trump-led Republican Party clean sweeps the US election in November.</p><p>Their estimate was predicated partly on the fact the dollar rallied around 5 per cent after Trump's surprise election win in 2016, but also lost roughly 5 per cent ahead of the 2020 vote when Trump lost out to current Democratic President Joe Biden.</p><p>"We suspect +5 per cent is the right amount of potential dollar strength to attribute to a Trump victory with a red wave," the bank's analysts said, referring to if Trump wins the White House and Republicans win both chambers of Congress. Trump is the likely Republican nominee for the November 5 election.</p><p>The analysts also predicted a similar pattern to 2020 when the greenback had completed most of its move by election night due to the way markets traditionally preempt outcomes.</p><p>"Therefore, we would expect the high in the dollar - potentially for the year - could very well be seen right around the election," they said.</p><p>A Republican sweep would also have the biggest impact on bond markets as it would likely result in new tax cuts, stimulus and trade tariffs on rivals like China.</p>.Donald Trump set to win Nevada's delegates after Haley humiliation.<p>That could lead to "higher rates and a steeper yield curve and higher term premium," Citi said, likening it to the bond market selloff in October when markets were also worrying about the rise in US debt.</p><p>"Long forward vol(alitity) on long-dated forward rates can be a carry friendly hedge for a Republican-sweep scenario, given that the long-dated vol has been trading directionally with the forward rates," the bank's analysts said.</p><p>Wall Street's election focus, meanwhile, is likely to be what happens to taxes.</p><p>Citi's assumption is that Trump would prioritise extending the current income tax regime as well as potentially layering on further corporate tax cuts.</p><p>They estimated, however, that a "clean extension" of cuts currently due to expire would add more than $3 trillion to the US government's deficit over the next 10 years.</p><p>"There is a question as to whether the Republicans will be comfortable adding trillions to the deficit under their control, particularly considering a one-term president," Citi said, adding that while Biden might also extend tax cuts, he may also raise some corporate taxes.</p>