Will Trump’s Team take Treasury Yields to Mars?

U.S. elections offered an interesting case study of how investment strategies around political events can rapidly evolve. Seen from the microcosm of our trading desk, I’ve noticed how the “Trump Trade” can be thought of as three district phases:

(a) Pre-election baskets: broader thematic trades based on sectors traditionally associated with the Republican Party and concerns about higher fiscal deficits.

(b) Post-election trades: high-beta assets linked to Trump’s convictions (tariffs, spending, etc), his personal brand, and his supporters.

(c) Inauguration strategies: taking shape now, but they suggest a more moderate Trump administration.

Let’s break them down:

Pre-election Baskets

Before the elections, many clients were focused on broader thematic trades, often structured as “worst-of” baskets of sector-specific ETFs. For example, a typical product would include financials for the deregulation theme, energy for the “drill baby drill” meme, and real estate for expected tax cuts and infrastructure spending. But we also saw plenty of interest in fixed-income trades, especially to hedge the risk of a spending-driven move higher in yields.

These trade ideas did relatively well. But after the elections, the real trading energy turned elsewhere…

Post-election Trades

Trump’s victory, with a Republican sweep and the popular vote, led investors to zoom in on what I would call the “hyper-Trump” trades. For example, Tesla as a proxy for Elon Musk, possibly Trump’s most public supporter. Or crypto, which fielded powerful pro-Trump lobby groups like the Fairshake super PAC. Or the Trump Media & Technology Group (DJT), a proxy for his brand.

What does this imply? To me, it suggests investors think Trump will use his strong mandate to manifest his convictions, personal brand, and to support his allies—perhaps even more, in relative terms, than the traditional Republican sectors. This is consistent with upward pressure on the back end of the Treasury yield curve, as markets further priced in the combined risk of fiscal spending and the inflationary impact of tariffs—both Trump policy hallmarks.

So what’s next?

Inauguration Strategy

I think the reaction to Scott Bassent as Treasury Secretary and Howard Lutnick to the Commerce Department offers clues about next stage of the Trump trade.

In one word: moderation.

The drop in yields, flattening of the Treasury curve, and decline in gold prices are all consistent with this interpretation.

My very early read from this reaction (please take it with a grain of salt) is that markets are positioning for how the actual Trump presidency will compare to his campaign rhetoric and even the previous term. In practice, this could be a less expansionary budget and smaller tariff risks than previously priced in.

Will there be a fourth stage to the Trump trade? I’m sure there will be.

Investors will need to be on their toes.

Nilesh Jethwa
Chief Executive Officer – Marex Solutions Division

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