Currently, strategists at JP Morgan and Morgan Stanley agree that U.S. Treasury yields will determine the direction of U.S. stocks after the election.
Today, the Morgan Stanley team led by Michael Wilson stated that if Trump wins the election and the Republican Party sweeps Congress, the U.S. 10-year Treasury yield is expected to experience limited fluctuations due to improved economic growth expectations, which would be a positive signal for the stock market. Analysts believe that in this scenario, cyclical stocks such as financial and industrial stocks will perform well.
However, they also cautioned that if Treasury yields rise &#34;significantly&#34; due to market concerns about fiscal prospects, risk aversion in the stock market will increase, and consumer stocks sensitive to tariffs will be hit hard.
On Monday and Tuesday, polling data before the U.S. election led some investors to reduce the so-called &#34;Trump trade.&#34; Polls show that Democratic candidate Harris and Trump are in a dead heat, with Harris having a slight edge nationally and in some swing states. U.S. Treasury yields have declined as a result, with the current yield on the 10-year Treasury at 4.294%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ea1c8e97-1c12-43c5-b891-3de344f2eebe.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/ea1c8e97-1c12-43c5-b891-3de344f2eebe.png"/>
Morgan Stanley indicated that if Harris takes the White House and Congress is divided, consumer stocks affected by tariffs and renewable energy stocks may outperform the market in the short term. At the same time, in this scenario, a decline in interest rates may also benefit consumer stocks sensitive to housing, while financial stocks, industrial stocks, and sectors sensitive to commodities may perform poorly.
JP Morgan's Mislav Matejka team also reminded stock investors to closely monitor the bond market in their report. They noted that compared to 2016, this year investors have a higher overall position in the U.S. stock market, with widespread expectations of a Trump victory leading to a positive market reaction.
They also pointed out:
<blockquote>
“ While the stock market may experience a rebound similar to 2016 after a Trump victory, the sustainability of the upward trend may depend on the extent of the response in Treasury yields.”
</blockquote>
Analysts believe that if Harris wins, uncertainty regarding corporate tax pathways will increase in the short term, but in the medium term, reduced tariff risks may provide support for the stock market

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Wall Street strategists generally believe that U.S. Treasury yields will determine the direction of U.S. stocks after the election. If Trump wins and the Republican Party sweeps Congress, the 10-year Treasury yield is expected to experience limited fluctuations, which would be favorable for the stock market; if Harris wins and Congress is divided, consumer stocks and renewable energy stocks affected by tariffs may benefit in the short term

- Strategists from JPMorgan and Morgan Stanley agree that U.S. Treasury yields will influence stock market trends post-election.  
- If Trump wins, a limited rise in 10-year Treasury yields could positively impact cyclical stocks, while a significant increase due to fiscal concerns may hurt consumer stocks.  
- Conversely, if Harris wins, consumer and renewable energy stocks might outperform, but uncertainty around corporate tax policies could increase in the short term.

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How to trade after the election? To trade US stocks, one must pay attention to US Treasury bonds