2 out of the 3 most likely US election outcomes would lead to a stock market sell-off
- Clinton victory, Republicans maintain House control: This would be in the Nomura economist's opinion a "non-event," as it is the most likely scenario and priced into markets, but cash could "come off the sidelines." The US dollar index would strengthen 0.5%, moving up the most against the Japanese yen and stocks would tick up in a "moderate relief rally." The Mexican peso would strengthen considerably against the dollar.
- Trump victory and Republican sweep: A Trump victory would lead to a "decent flight-to-quality move" into Treasurys and drive yields down by 23 to 35 basis points. The US dollar index would weaken by 1.3% and the Mexican peso would weaken considerably. Stocks would fall by 3 to 5% and continue to fall throughout the rest of the year.
- Clinton victory and Democratic sweep: The unlikely nature of this event and the possibility of some of Clinton's more extreme tax policies come to pass would be a slight negative. The US Dollar index would strengthen by 1.9%. Stocks would sell off by about 2 to 4%.