US Election : The day after

  • An « unknown » has been removed : The President is known .
  • + Big hopes in term of growth outlook.
  • + Trump President to be more pragmatic vs populist Trump candidate.
  • …Global Equity rally against all odds from before election : Looks overdone but technicals are to be watched for break up/down confirmations.
  • Financial & Healtcare rallying the most (Regulations & Yield curve steepening )
  • Industrials 3rd best sector (Big Infrastructure spending expected).
  • Promised tax cuts to favour US companies in general.
  • Metals up.
  • USD (more stimulus = inflation risk = more fed hikes)  & Commodities currencies up.
  • Fear of more inflation linked to fiscal stimulus/tax cuts.
  • + Rising trade barriers is also inflationnary (supply side shock).
  • + Fear of more Bonds issue linked to increased deficit.
  • + Fear of a less independant FED / Yellen to resign ?
  • … Bond markets sell-off : 10Y treasury > 2% / more pain to come ?
  • .. depends on stimulus size ..House republicans are fiscally conservative!!
  • Risk : If too large deficits expected from policies put in place , bond yields could skyrocket and kill the growth induced by new policy .
  • Uncertainty to persist : Time lag before new administration discloses its real plans.

Stocks Climb With Metals as Trump Win Revitalizes Growth Outlook

 

Bond-Market Inflation Outlook Picks Up After Trump Victory

http://www.bloomberg.com/news/articles/2016-11-10/bond-market-inflation-outlook-picks-up-after-trump-victory

 

 

 

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