Trump quickly made his mark on the financial markets on Wednesday. With the voting results in key swing states continuously leaning towards him, bringing him closer to returning to the White House, all 'Trump trades' took off.

The US stock market surged, s&p futures rose 1.4%; the US dollar recorded its largest increase against major currencies since 2020; US bonds plummeted, benchmark yields rose by over 0.1 percentage points; bitcoin soared to a historic new high.

Although the voting results have not been fully disclosed, these actions send a clear signal. Investors expect the second Trump administration to be very similar to his first, implementing a series of policies (tax cuts, deregulation, tariffs) expected to stimulate economic growth, corporate profits, and inflation simultaneously.

For Wall Street professionals who have been utilizing Trump trades, this is a moment to prove themselves right, even though it may prove to be temporary.

"If you have been engaging in 'Trump trades' over the past six weeks, you would find it remarkable," said Ed Al-Hussainy, rate strategist at Columbia Threadneedle Investment. "The question is, is now a good time to take profits?"

While the information conveyed by investors is generally positive, there are also severe warnings hidden in market fluctuations.

The surge in US bond yields highlights concerns that Trump's policies will only further exacerbate the bloated budget deficit and reignite inflation. Federal Reserve officials have just managed to calm this spiral after the pandemic. In Wall Street terms, this is the bond vigilantes pressuring Washington's leaders to control spending.

"The vigilantes are completely in control of the situation. Panic is starting to spread, and the consolidation we anticipate is happening," said Andrew Brenner of NatAlliance Securities.

Ahead of the vote, fund managers are still heavily betting on stocks, even after the S&P 500 index has risen by 23% in 2024. According to a report from Morgan Stanley's Quantitative and Derivatives Strategy team on Tuesday, asset managers have "maintained record net long positions in U.S. stock index futures."

The market's long exposure to the S&P 500 index, Nasdaq 100 index, and Russell 2000 index has increased to approximately $400 billion, nearly double what it was two years ago, while total short positions have fallen below $100 billion for the first time since 2015. The report states that retail investors have also been increasing their exposure to U.S. stocks.

According to the latest data from the U.S. Commodity Futures Trading Commission, in the currency market, hedge funds and other speculative traders hold long U.S. dollar positions of approximately $17.8 billion.

In a report, George Saravelos, Global Head of FX Research at Deutsche Bank AG, wrote, "In the short-term agenda, the more emphasis on tax cuts and deregulation, the more favorable for risk assets."

The biggest gainer is Bitcoin, which has surged over 8%, intensifying the pre-election rally as investors bet that the Trump-favored digital asset will win the White House.

For Al-Hussainy, the question now is whether these actions can continue. He said:

"I expect there will be some profit-taking on the 'Trump trade,' while there will be bargain hunters on the other side. The extent of this balance in the market right now is hard to say."