‘Trump trade’ triggers international bond market sell-off – newest updates

Bonds are being sold off around the world as markets bet that Donald Trump is increasingly likely to win the US presidential election.

The yield on UK bonds – which moves inversely to its price – rose three basis points to 4.17pc, while US Treasury yields climbed above 4.2pc for the first time since July.

Meanwhile, German bond yields – a proxy measure of government borrowing costs – have climbed four basis points to 2.32pc, touching the highest level in more than a month.

It comes amid increasing bets that Donald Trump – who has championed inflationary economic policies, such as tariffs – is leading the race for the White House.

According to Polymarket, the Republican candidate has a nearly 65pc chance of winning the November 5 election, compared to less than 36pc for Kamala Harris.

Higher inflation would likely force the US Federal Reserve to keep interest rates higher for longer after announcing a first reduction in four years in September.

In what commentators are dubbing the “Trump trade”, markets have responded to expectations of higher rates by sending the value of the dollar higher, as well as cryptocurrencies like bitcoin, which the former president has said he will support.

Christopher Dembik, senior investment adviser at Pictet Asset Management, said: “This is very clearly linked to trading a victory of the Republicans — and therefore to an agenda which would be much more inflationist than that of the Democrats. We’re in a market that is betting on Trump.”

The bond market rout spread to Asia, where the yield on Australian benchmark debt surged as much as 16 basis points. 

Robert Dishner, senior portfolio manager at Neuberger Berman in London, said: “With less than two weeks now until the US elections, concerns about the fiscal outlook and its potential upward pressure on inflation have become more acute.”

Read the latest updates below.