US presidential election: Trump’s 2016 win shook markets. Traders will not get fooled again

Donald Trump’s surprise victory in the 2016 presidential election delivered a shock to financial markets. If he manages to secure a second one, traders will – if anything – be far more prepared.

Trump seems to be on a quicker path to the nomination than eight years ago, when he did not lock it down until May. And polls show it would likely be a close contest between him and President Joe Biden, a shift from his long-shot status in 2016.

The result: Wall Street is already starting to game out the impact of Trump’s possible return to the White House.

“This time the markets will be aware of both possibilities and price them to some extent – we wouldn’t expect the same volatility as we saw in 2016 after the election,” said Daniel Tobon, head of G10 FX strategy at Citigroup Global Markets.

Nothing is assured, of course, and Trump’s prospects risk being upended by the ongoing criminal cases against him or a surprise turn of events at the polls. That is made the election little more than background noise so far – for markets, at least, with the focus instead squarely on the trajectory of the economy, geopolitical tensions and when the Federal Reserve will start cutting interest rates.