Ignore the polls. What financial indicator might give an inkling both of the likelihood that the presumptive Republican nominee will take the White House in November, and the impact a Donald Trump administration might have?

One candidate is the cost to insure against a default by the Mexican government on its sovereign bonds.

At the start of 2015 the spread on a five-year credit default swap contract was 100 basis points. This week it was 160 basis points.

In the intervening period Mr Trump began his presidential campaign by accusing Mexico of sending its worst people to the US, including criminals and rapists.

His signature policy is a 1,000-mile “beautiful wall” on the southern border to be paid for by the US neighbour, its largest trading partner.

In practical terms, the estimated cost of such a wall would be about $7bn a year during Mr Trump’s first term, adding about 2 per cent to Mexican government spending.

However, it would do so at a time when the government there is already trying to cut annual outlays by $10bn.

Mr Trump in April suggested that he could use emergency powers to ban remittances if Mexico refused to pay, cutting off a source of cash which the World Bank estimates is equivalent to 2 per cent of Mexican economic output.

There is more than US politics in play, of course. The Mexican government recently downgraded estimates for future economic growth, and, as an oil producer, it has felt the effect of low prices. Nor can the complex reality of a nation’s prospects be reduced to one number.

Yet there has been a reassessment of a country which only a year ago was able to issue a 100-year sovereign bond. Mexico, which has much of its economy and industry intertwined with that of the US, would bear the brunt of an overtly protectionist and nativist agenda.

Indeed, the peso is the worst performing emerging market currency against the dollar this year, dropping 7 per cent, and it has fallen further against the euro.

If the chances of Republican victory have been underestimated, further movement for the currency, bonds and CDS prices could lie ahead. Call it the Trump Change we may have to believe in.

dan.mccrum@ft.com

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