Wall Street is increasingly confident that Donald Trump will win the presidency again.

Investors are pouring money into banking, cryptocurrencies, and energy, anticipating deregulation under Trump.

His company, Trump Media & Technology, has nearly tripled its stock value recently despite losses.

Treasury yields are rising as investors expect inflation to increase, affecting bond prices.

The dollar is also gaining strength as traders predict Trump’s policies will drive inflation and reduce bond prices.

This phenomenon, termed the “Trump trade,” is reminiscent of his first term.

His proposals to cut taxes and reduce regulations could boost profits for sectors like tech and crypto, with bank stocks rising 8.5% in two weeks and Bitcoin up 13%.

However, economists warn that a second Trump term might elevate inflation, destabilizing the recovering U.S. economy.

Mortgage Rate Volatility

As market sentiment shifts toward a potential Trump victory, mortgage rates are climbing despite a Federal Reserve rate cut intended to lower borrowing costs.

The average 30-year mortgage rate is now 6.44%, up from 6.32% last week. A year ago, it was at 7.63%.

High mortgage rates could hinder home sales and add to the housing market’s challenges.

Tariffs, Taxes & Immigration

Many economists caution that Trump’s policies on tariffs and taxes could lead to higher inflation.

If he enacts broad tax cuts and tariffs without reducing government spending, interest rates may stay high, hampering growth.

The Peterson Institute forecasts inflation could rise to 9.3% by 2026 if Trump’s tariffs are applied.

Another critical element of Trump’s platform—rigorous immigration policies—could also inflate prices, resulting in labor shortages and higher wages in essential sectors.

Voter Sentiment vs. Economic Reality

Despite inflation fears, many voters still prefer Trump’s economic strategy over that proposed by Biden.

Trump’s messaging about rising prices under Biden resonates, as food costs have increased significantly since the pandemic.

While inflation rates have dropped to around 2.5%, essential goods remain costly, hindering public perception of economic improvement.

Overall, Trump’s proposals could significantly impact inflation, even as voter support appears to favor him.