Gold prices exploded overnight as the reality of a President Trump began sinking in. By 11pm Eastern, he had both Florida and Ohio in the bag, virtually assuring his victory. Gold hit an overnight high of $1,338, more than $60 over Tuesday's closing prices, as global stocks plunged on the news. Prices began to normalize after Trump gave an unexpectedly conciliatory victory speech, promising to work toward national unity.
After eye-popping gains overnight, gold prices ratcheted lower on the US open. Prices are back below the important $1,300 mark, but still more than $10 higher, as Wall St shakes off severe overnight losses sparked by Trump's win. Silver prices didn't see much safe haven demand overnight, but still caught a ride on gold's coattails. Spot silver is holding on to some of its gains, trending 1.2% higher this morning
The Mexican peso was probably the most negatively affected of all currencies last night, falling as far as 12% as a Trump victory became clear, before recovering to "only" 9% lower. This was the largest single drop for the peso since the 2008 global financial crisis. Trump's campaign focused heavily on illegal immigration from Mexico to the US, while manufacturing jobs moved from the US to Mexico.
This isn't to say that the US dollar had a happy evening. Uncertainty over a Trump presidency spooked forex traders, who dumped dollars in favor of the yen and Swiss franc. Like many other markets, the greenback is erasing overnight losses this morning.
Stocks are veering from losses to gains and back this morning, as Wall St continues to try and shake the volatility seen in stock futures overnight. The opposite is true in Russia, where there were probably celebrations in the Kremlin. President Vladimir Putin expects Trump to drop sanctions against Russia for its invasion of Crimea, already this morning saying he ready to fully restore relations between Russia and the US.
Oil prices, which were pressured by a Trump victory, were pushed further down by news that the EIA had reported a 2.4 million barrel increase in US crude oil stockpiles.
Treasuries were hit hard, as the bond market anticipates not only rate hikes by the Fed, but higher inflation from higher government deficit spending.
The Trump Era?
When Donald Trump is inaugurated as the 45th President of the United States on January 20th, he will be greeted by a Republican-controlled House and Senate. Additionally, he will be appointing a conservative judge to the US Supreme Court to fill the vacancy caused by the death of Justice Scalia earlier this year.
Trump's promises of substantial spending on infrastructure by the federal government may have won him votes in the election, but he may find Tea Party Republicans balking at the idea of expanding the national debt. He may be able to mollify them by acting to repeal Obamacare, however.
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