Markets are more uncertain about Trump victory in final days

Ahead of the Tuesday, Nov. 5, presidential election, the word of the week is “uncertainty.” Polls predict drastically different outcomes, like the Des Moines Register poll that has Vice President Kamala Harris leading in the deep-red state of Iowa.

“This race is filled with uncertainty today,” political strategist David Axelrod said.

And that uncertainty is showing up in the markets. From predictions, to cryptocurrencies, to a Donald Trump stock market indicator, everything’s a bit haywire the closer it gets to polls closing on the evening of Tuesday, Nov. 5.

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Let’s start with the predictions market. This is a newer one as Americans can now bet on the outcome of the presidential election. 

Looking at Kalshi, from Oct. 10 to Oct. 29, the odds on former President Donald Trump and Harris went from 50-50 to Trump being up about 65% to 35%. Then, in the four days that followed, Trump’s odds plunged until Harris took a brief lead. On the day before the election, Trump has rebounded, now up 57% to 43% as of Monday, Nov. 4. 

It’s not just the official predictions markets where investors are placing their bets. In October 2024, markets saw significant movement in areas investors refer to as the “Trump trade.” 

Take Bitcoin, which has had a pretty outstanding year. Bitcoin has become part of the Trump trade after Trump fully embraced cryptocurrencies earlier this year. Like prediction markets, the price of Bitcoin peaked on Oct. 29 at around $73,000. Since then, enthusiasm has pared back to around $68,000 as of Monday morning. 

Nothing is more indicative of the trade around the former president than what has become his own meme stock. DJT, the ticker symbol for Trump Media and Technology Group, has traded less on the fundamentals and more on Trump’s electability. The stock is up 90% over the past month, but again, peaked on Oct. 29. In the past 5 days, it’s fallen more than 40%.

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The name of the game is volatility. In October, it seemed markets of all kinds were increasingly positioning for a Trump victory. In the final stretch, uncertainty has set in. The volatility index, the VIX, measures just this. It’s also called the fear index. It’s trading above its 200-day average.

The dollar dropped and bonds rallied as traders realigned expectations for Tuesday. And the election isn’t the only market mover this week. On Thursday, Nov. 7, the Federal Reserve will make its next rate cut decision. Markets are expecting a quarter-point cut.