According to JPMorgan analysts, other markets "appear to price in rather modest probability," whereas credit markets price in a larger likelihood of Donald Trump winning the next election.

With comparable rates and few clues in foreign currency (FX) markets, analysts see that equity trades indicate an average chance of about 22%.

Ahead of the election, investors are reportedly enquiring about positioning, specifically over the amount of space available for additional short covering and position unwinding, according to JPMorgan.

If President Trump wins, short covering in equities might increase in the equity space, especially in U.S. regional banks and small caps.

According to JPMorgan, this analysis is predicated on a comparison of market movements since August 1st, avoiding the volatility that followed the August 2nd release of the dismal U.S. payroll data.

Analysis of futures holdings in the FX market, meantime, suggests that the long euro/short dollar bets that were accumulated between October 2023 and July 2024 have mostly been unwound. However, if Trump's tariff threats materialise, there is still a chance that this trend may return to 2022 levels.

Additionally, based on investing.com's article, long-duration holdings in 10-Year Treasury futures have been cut in half since reaching their peak between July and September, allowing for additional unwinding in the event that Trump wins.

A greater likelihood of a Trump victory is reflected in the credit market's notable tightening of U.S. corporate credit spreads since August.

(Sources: investing.com, reuters.com)