Bank of America Harnett: The most likely reversal trade after the election - "Buy U.S. Treasuries"
The reason is that if the new government realizes the inflation issue, it may appoint hawkish Treasury officials, which would be beneficial for U.S. Treasury bonds and detrimental for gold
As the U.S. election approaches, Mike Hartnett, Chief Investment Strategist at Bank of America Securities, has proposed a contrarian investment suggestion: "Buying U.S. Treasuries" may become the most promising trading opportunity after the election.
In the latest "Flow Show" report, Hartnett wrote that the U.S. dollar and Treasury yields have strengthened over the past four months, primarily due to rising market expectations for a Trump victory. However, it is precisely this overly consistent market expectation that poses potential adjustment risks for the dollar and Treasury yields.
Hartnett analyzed that regardless of whether Trump or Harris is elected, the new government may take action to control the budget deficit in 2025.
The reason lies in voters' strong dissatisfaction with rising inflation and living costs, which has been clearly reflected in Biden's continuously declining approval ratings (as shown in the chart below, Hartnett believes that even with low unemployment rates, Biden's approval ratings continue to decline, reflecting the significant destructive power of inflation on electoral prospects).
In this context, the new U.S. government may appoint hawkish Treasury officials, which will create significant investment opportunities for long-term U.S. Treasuries. 
Hartnett's Three Contrarian Investment Ideas
In this context, Hartnett proposed three contrarian investment ideas worth noting.
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A Trump victory is not bullish for the stock market. The reason is that Trump's tax cuts and tariff policies may further drive up inflation, triggering market adjustments. In contrast, a Harris victory may maintain the status quo, benefiting globalization and tech stocks.
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Global markets will outperform U.S. markets. The reason is that Trump's tariff policies may prompt Asian and European central banks to adopt aggressive rate cuts, combined with the downward pressure on oil prices from easing geopolitical risks, thereby boosting local markets.
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Long-term U.S. Treasuries will see investment opportunities. The reason is that if the new government recognizes the inflation issue, it may appoint hawkish Treasury officials, which would be bullish for U.S. Treasuries and bearish for gold