CROSBY Research – Crosby Bi-noculars (Bi-weekly Issue 63)

22 July 2024

Investors reactions on news of Biden dropping out

• Early trading in Asia on Monday was relatively subdued, suggesting investors are taking a wait-and-see approach. The dollar was quoted slightly lower against major peers, while Bitcoin hovered around $68,000 and equity futures were hardly changed.
• In the Treasury market, US longer-maturity bond futures rose more than their shorter-dated equivalents, pointing to a modest reversal of the so-called curve steepened trade associated with a victory for Trump.
• Bloomberg strategist: “Unless there is a material change to Trump’s chances, traders will likely position for dollar weakness as there could be more verbal attacks against weak foreign currencies leading into November. Meanwhile, Treasuries will have a more nuanced outlook. Curve steepening is likely to extend amid concerns about larger deficits, but within a framework of falling yields as the Federal Reserve moves toward its first interest rate cut this year.”