Attention! Goldman Sachs warns: U.S. election risks are beginning to affect markets

Author: Wall Street Insights

As the debate between Biden and Trump kicked off, the impact of the US presidential election on the financial market began to gradually emerge.

According to Global Network, the US media summarized the performance of both parties in the first 30 minutes: Biden was sometimes incoherent, and Trump lied on issues such as the economy, abortion, and defense spending of NATO members. The two also Fierce personal attacks were made against each other."

Although the S&P Index has continued to fall for nearly 400 trading days without falling more than 2%, Goldman Sachs recently reminded that this situation may soon change .

Goldman Sachs analyst Oscar Ostlund believes that the options market usually starts pricing around three months before the election. Although it has not yet fully entered this stage, market volatility is expected to occur soon. As the U.S. election approaches, market volatility is about to increase, and the market should pay close attention to the potential impact of the election on the market.

CICC Liu Gang’s team believes that as the first round of the presidential election debate is significantly advanced from the previous September to the end of June. , and the approaching monetary policy "window period", all make it possible for

election transactions to start early, and the variables and impacts it brings may also gradually increase In addition, it is worth mentioning that

16 Nobel Prize-winning economists recently issued a joint letter sternly warning:

If former President Trump wins the election in November, his economic proposals will reignite accelerating inflation and cause lasting harm to the global economy. .

Some analysts also pointed out that whether Trump or Biden is elected, higher inflation is inevitable, the only difference is the pace

Goldman Sachs: Election risks are beginning to spread to financial markets

. The 2024 presidential election in the United States will usher in the first candidate TV debate at around 21:00 on the 27th local time (9:00 on the 28th, Beijing time). Biden and Trump will compete on stage again after nearly 4 years

Today. The TV debate may provide new clues on how the market views the impact of the election on asset markets. After surveying 800 institutional investors around the world, Goldman Sachs analysis concluded three key points:

▲ Regardless. Whether the Republicans or Democrats are in power, the government will increase the executive branch's spending freedom, which is undoubtedly a negative factor for the bond market

▲If Trump wins, whether it is a divided House of Representatives or a unified government, the market believes that. Both will be positive for the stock market, as it may mean the Fed will adopt more dovish policies

▲Investors generally believe that a Democratic victory will be negative for the US dollar and may lead to a depreciation of the US dollar.

In his election preview report, Goldman Sachs strategist Dominic Wilson provided a detailed analysis of the impact that the four major U.S. presidential and congressional election results may have on the market. The four scenarios are a Republican sweep, a Democratic sweep, a divided Trump administration, and a divided Biden administration.

Specifically,

1. Republican sweep:

Under a Republican sweep scenario, Wilson sees a modest rebound in stocks, rising yields and an appreciating trade-weighted dollar. Bond yields are likely to rise as a Republican administration is likely to extend expiring tax cuts and potentially enact further corporate tax cuts.

2. Democratic Sweep:

Wilson believes that the stock market will decline moderately, the dollar will depreciate moderately, and yields will rise. Expectations for greater fiscal stimulus from a Democratic administration have pushed bond yields higher.

3. The Trump administration is divided:

Under this scenario, the stock market will decline moderately, yields will rise slightly, and the dollar will have obvious upside. A strong reaction to potential tariffs combined with fiscal tightening could have a negative impact on stocks and yields.

4. Divided Biden Administration:

Stocks will be flat, yields will fall, and the dollar will weaken. If the new tariff reductions are smaller than expected, that would add to the upside for stocks and could push yields higher rather than lower.

Goldman Sachs advises that while baseline estimates do not provide a strong rationale for hedging equity exposure, investors should remain vigilant in the face of fiscal expansion and tariff risks. A stronger dollar is seen as a more reliable way to reduce downside for stocks, but yields may also be affected in the face of tariff risks.

CICC: How the US election affects the economy and market

After reading Goldman Sachs’ analysis, let’s take a look at CICC’s views.

CICC pointed out that compared to current President Biden, the market is obviously more concerned about Trump’s policies, firstly because it may bring about changes, and secondly because some ideas may be more “extreme.”对比拜登和特朗普的政策主张，发现在贸易和投资支出方面的政策具有一定共性，而主要差异集中在财税、移民和产业政策上。

从经济和政策影响角度看：

1）多数政策提振美国经济的同时自带通胀属性，如贸易、投资支出、补贴甚至移民等政策，这可能导致大选后通胀难以持续大幅走低；

2）货币政策空间或被压制，不论是增长还是通胀的支持都可能使得美联储不需要降息太多；

3）2025年1月债务上限生效，或加大国债供给与债券利率的波动。

从市场与资产影响角度看：

1）美债：大选后政策刺激预期和增长修复、通胀回升都将给美债利率带来更多上行压力，同时需要注意债务上限的临近或再度导致发债不均，2025年美债供给量可能前低后高，重现2023年10月期限溢价带动美债利率创下高点的情形。

整体判断美债中枢4%，降息前区间4.7%-4.2%，宽松交易依然可以进行，但降息兑现时可能也是降息交易接近尾声时。

2）美股：整体表现不差。特朗普和共和党主张的大规模减税将提振企业盈利，但高新产业补贴或退坡，或有利于周期的情绪。

2018年特朗普主张的大规模减税提振企业盈利

3）大宗商品：特朗普的政策主张下油价表现可能相对中性，加快石油和天然气的勘探许可发放可能会导致美国石油产量增加。

4）美元：短期美元没有大幅走弱基础。2016年特朗普当选后的减税与基建政策迅速提升增长和通胀预期，美元在其当选后趋势性走高，但本次特朗普提出“弱美元”政策，推动美元走势以“提振”美国出口，需要关注其可能影响。

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