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M Stanley Strategist Predicts US Treasury Yields to Set Tone for Post-Election Mkt If Republicans Win in Landslide
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If Donald Trump wins the US presidential election and the Republicans gain control of Congress, the trend of 10-year US Treasury yields will set the tone for the market after the US election, a team led by Morgan Stanley strategist Michael Wilson suggested in its report. If yields remain relatively stable or climb by less than 20 bps amid improved economic growth expectations, cyclical stocks including financials and industrials may outperform the market, according to the report. Conversely, if yields rise more significantly and are driven by an increase in term premiums due to fiscal sustainability concerns, market risk aversion will intensify, and consumer stocks that are sensitive to tariffs will underperform. If Trump wins but Congress is divided, the Morgan Stanley team expects the initial market reaction to moderately favor high-quality cyclical stocks. If Kamala Harris wins and Congress is divided, tariff-affected consumer stocks and renewable energy stocks may benefit in the short term. In this scenario, falling interest rates could also favor housing-sensitive consumer stocks, while financials, industrials, and commodity-sensitive sectors may underperform. If Democrats win both the White House and Congress, stock market trading may initially be cautious given the prospect of higher corporate taxes. Meanwhile, sectors previously hurt by speculative bets on a Trump victory, such as tariff-affected consumer goods and renewable energy sectors, may deliver encouraging performance. AAStocks Financial News |
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