The five most crowded trades before the U.S. election

As the U.S. election enters its final sprint, Wall Street is competing to make last-minute bets.

Specifically, in recent times, going long on the dollar, DJT, Bitcoin, and certain thematic U.S. stocks, while shorting U.S. Treasuries, has been the most crowded election trade.

Currently, the yield on the 10-year U.S. Treasury has rebounded about 70 basis points from its recent low, the dollar has rebounded 3.3% from its low, Bitcoin fell back after reaching an all-time high last week, and bank stocks and clean energy stocks have risen and fallen about 5% respectively over the past month, but both reversed course on Monday, with DJT rising over 180% from its low.

U.S. Treasury Yields

Public information shows that Trump's economic proposals are expected to significantly increase the federal budget deficit, potentially reigniting the "reflation risk" in the U.S. Therefore, Trump's election theoretically puts pressure on U.S. Treasuries and supports a stronger dollar.

As the probability of Trump's victory has increased in recent weeks, the yield on the 10-year U.S. Treasury has quickly climbed, currently reported at 4.314%, up about 70 basis points since the low on September 16, nearly erasing the cumulative decline since June.

Dollar

In addition to the inflation risks that may arise from increased deficits, Trump's aggressive tariff policy may also boost the dollar to some extent.

Economists state that significantly raising import tariffs will lead U.S. consumers to reduce spending on imported goods, thereby pushing up the value of the dollar.

The trend of the dollar is roughly consistent with the trend of the 10-year U.S. Treasury yield, experiencing a strong rally since October, rebounding 3.3% from the low on September 27, currently reported at 103.74.

Bitcoin

In stark contrast to Biden's crackdown on the crypto industry, both Trump and Harris support crypto assets, with Trump previously vowing to make the U.S. the "global crypto capital."

Bitcoin has experienced wide fluctuations over the past six months, with a cumulative increase of 27.3% over the past three months. It briefly reached an all-time high last week but quickly fell back below $70,000, currently reported at $68,800 per coin.

Clean Energy Stocks and Bank Stocks

Traders expect that if Trump takes office, he will cancel the Biden administration's tax incentives for clean energy, which would severely impact clean energy stocks. There are also views that due to Harris's advocacy for increased corporate taxes and heightened financial regulation, her election could negatively affect bank stocks.

Over the past six months, the Nasdaq Bank Index has risen over 15%, while the BlackRock Global Clean Energy ETF has fallen over 3%. In the past month, they have risen and fallen about 5% respectively, with both reversing course on Monday, as the Nasdaq Bank Index fell over 1% during the day, while the BlackRock Global Clean Energy ETF rose over 2% during the day

Trump Media & Technology Group Stock (DJT)

As a media technology company primarily controlled by Trump, Trump Media & Technology Group (DJT) can be considered a "pure Trump concept stock," representing the most direct option for investors betting on Trump's victory.

Analysis indicates that, given DJT's lack of profitability in terms of performance, its stock price movements are unrelated to the company's fundamentals and can be viewed as a meme stock.

Last week, driven by retail investors' buying frenzy, DJT triggered trading halts five times during the day, rebounding over 182.6% since its low on September 23. Its stock price has nearly doubled this year, and its current market capitalization has surpassed that of The New York Times.