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bitcoin and gold may benefit from geopolitical tensions and the upcoming US election as investors prepare for a “potentially catastrophic scenario,” JPMorgan said.
The investment banking giant said in an Oct. 2 note that these developments would create the conditions for a so-called “downgrade trade” that could boost demand for safe-haven assets.
A “downgrade trade” is characterized by rising demand for gold amid heightened geopolitical risks, uncertainty about long-term inflation rates and persistently high government deficits in major economies, it said.
If Trump were president again, he would “likely reinforce the 'downgrade trade' both through tariffs (geopolitical tensions) and through expansionary fiscal policy ('debt downgrade'),” the JPMorgan analysts said.
JPMorgan says markets have not yet priced in Trump's victory
Markets have not yet priced in Trump's victory, mainly because traders have been too busy with the situation. recession trade in recent months, the investment bank said.
In the event that Trump wins and a “Trump flip” plays out similarly to 2016, JPMorgan analysts believe it could result in higher U.S. Treasury yields, a stronger dollar, higher credit spreads. adjusted and outperformance of the US stock market.
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JPMorgan Chase CEO: Trump 'grew the economy' and was 'right' on critical issues | media
Big finance is sending out some interesting signals as the 2024 election approaches, including former JPMorgan Chase CEO Jamie Dimon praising former… pic.twitter.com/meoHBZi53Z
—Owen Gregorian (@OwenGregorian) twitter.com/OwenGregorian/status/1841438277628289333?ref_src=twsrc%5Etfw”>October 2, 2024
JPMorgan's prediction is based on what was observed in the six-month period surrounding the 2016 US election. During this period, 5-year Treasury yields rose 1%, while the dollar index ( DXY) was up 8% and US stocks were up about 6%. Banks also outperformed the rest of the S&P 500 index by 15%.
bitcoin Outperforms Gold in Past 24 Hours as Trump Polymarket Odds Fade
The price of gold reached a new all-time high of 2,685.49 in late September, as investors retreated to the financial safe haven as the conflict in the Middle East escalated. It has since fallen back to trading at 2,643 at 8:42 am EST.
In the last 24 hours, the coveted commodity was surpassed by bitcoin/”>btc. This is because the price of the leading cryptocurrency rose more than 1% during the last trading session to regain a position above the $61,000 mark.
Meanwhile, the odds of Trump winning the election fell 1% on decentralized betting platform Polymarket. Vice President Kamala Harris saw it odd rise by an equal amount to regain the advantage over his political rival.
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