BlackRock believes that if a candidate challenges the election results, it will lead to "weeks of very chaotic legal disputes," which could disrupt the capital markets. The fiercely competitive election situation may be unfavorable to the market, but it has not been priced in by the market
The "Trump Trade" is in full swing, not only popular in the US stock market but also starting to impact the European market. However, BlackRock believes that the market is underestimating the risk of the US election results ending in a deadlock.
On Thursday local time, Jean Boivin, Managing Director of the Research Department of the global asset management giant BlackRock, stated in an interview with Bloomberg that if a candidate challenges the election results, it will lead to "several weeks of very chaotic legal disputes," which could disrupt the capital markets.
Boivin mentioned that trying to trade based on the US election is "a foolish move," and what really needs attention is the fiercely competitive election situation. This situation may be unfavorable for the market, but it has not been priced in by the market. He believes that investors should be prepared for this.
If the election ends in a deadlock, voters and investors may have to wait until the election night to know the results, especially in the scenario where both candidates choose to challenge the vote count in key swing states.
Under the dominance of the "Trump Trade" and the "no economic landing," the US stock market remains close to historical highs this month, while the US bond market has triggered a selling wave comparable to that of 1995.
Analysts believe that the rise in US bond yields is partly driven by Trump's high tariff advocacy, which may exacerbate inflationary pressures.
In the foreign exchange market, the US dollar index has risen to a three-month high, poised to achieve its best monthly performance since 2022. Standard Chartered Bank estimates that around 60% of this trend can be attributed to the prospect of Trump's victory