5 parts of the market moving on Trump's falling election odds

• Kamala Harris' rising election odds in recent days have weakened the Trump trade.
• In a poll over the weekend, Harris led Trump in Iowa, swinging betting markets toward Harris.
• Treasury yields, the US dollar, Mexican peso, Bitcoin, and Trump Media stocks are shifting.

A surprise shift in a key presidential poll over the weekend has swung betting odds toward Kamala Harris, hitting a host of "Trump Trades" that have rallied in recent weeks.

A poll released over the weekend had Harris leading former President Donald Trump in Iowa, 47% to 44%. The poll, from Des Moines Register/Mediacom and conducted by pollster J. Ann Selzer, is significant in that Iowa has been considered a state likely to be won by Trump.

"It's hard for anybody to say they saw this coming," Selzer told the Des Moines Register. "She has clearly leaped into a leading position."

The poll sent shockwaves across betting markets over the weekend, with Kalshi showing Harris' odds briefly overtaking Trump at 51% to 49% for the first time since early October.

As of Monday morning at 11:35 a.m. ET, the odds on the betting site were 55% for Trump and 45% for Harris. On Polymarket, where Trump's odds were over 60% last week, they've fallen to 58.1%, with Harris' odds at 42.8%.

The big swing in the betting odds created shockwaves that are being felt in financial markets on the eve of the election.

Here's where things stand for five parts of the Trump Trade.

(1) Treasury yields are falling

The 10-year US Treasury yield plunged 12 basis points on Monday, falling to 4.275% after the weekend's polling surprise.

A run-up in Treasury yields since the Fed cut interest rates in September reflected the market's belief that a second Trump presidency looked likely and that it would be an inflationary event due to his promises of sweeping tariffs and mass deportations, which would fuel prices and wage growth, respectively.

Investors in recent weeks priced in higher yields on the view that Trump's policies will make it hard for the Fed to lower rates much further.

(2) The US dollar is weakening

The dollar soared in October as the odds of a Trump presidency rose, and as markets saw the potential for tariffs and higher interest rates to boost the currency versus rivals.

The US dollar index, which measures the strength of the greenback against a basket of other major currencies, jumped about 4% in October.

However, that trade slipped on Monday following Harris' rising betting odds, with the US dollar index falling nearly 1% to 103.55.

(3) The Mexican peso is gaining

The peso has sharply declined over the past month as Trump's odds of winning the election gained momentum.

The former president is seen as likely to implement tough trade policies aimed at Mexico in order to "reshore" manufacturing from Mexico to the United States, a development which would hurt the peso.

Over the past month, the Mexican peso has lost 3% against the US dollar, but has retraced much of that loss since the polls and betting market moved toward Harris, gaining 1.5% on Monday.

(4) Bitcoin drops

Bitcoin has been among the hottest Trump trades this year due to the former President's enthusiastic embrace of the crypto market.

Trump gave the keynote speech at the 2024 Bitcoin Conference in July and participated in a crypto token launch last month. He's been viewed as the "crypto president" by the market and his victory has prompted outlooks for huge gains in the token's price.

While Harris has a positive attitude toward the bitcoin and crypto community, it has not been as strong as Trump's.

Therefore, with Harris' rising betting odds over the weekend, bitcoin moved about 2% lower since Friday to $68,350.

(5) Trump Media stock drops

Perhaps the biggest Trump trade has been Trump Media and Technology Group, the parent company of social media platform Truth Social. The stock embarked on a meme-like rally in recent weeks as the former president strengthened his position in betting markets and the polls.

The firm's valuation even eclipsed that of Elon Musk's X, based on the latest update from Fidelity in August.

However, the stock has seen a sharp reversal since Trump's odds of winning the election have dipped. Shares of Truth Social dropped as much as 5% on Monday and are down about 47% since last week.