According to ChainCatcher and Jin Shi Data, investors in some asset classes are gradually diminishing their enthusiasm for the 'Trump trade' as they question whether Trump will push his ambitious tariff proposals after taking office as President of the United States. As of Thursday's close, the dollar has erased most of its post-election gains, and U.S. Treasury yields have also returned to recent ranges following two days of extreme volatility. These moves suggest that as investors weigh whether Trump's policies align with his campaign promises, market fluctuations may occur. As market turbulence settles, the focus is shifting to other significant events.
Vishnu Varathan, the Chief Economist and Strategist at Mizuho Bank in Singapore, stated, "Even the most fervent 'Trump trade' investors are now stepping back and pondering whether the stakes are too high at this point. Traders are considering the execution situation and how some of his policies may effectively unfold." A key question for investors is how much of Trump's tariff measures will materialize. Some are also taking profits, including bullish dollar and bearish Treasury trades, which performed well earlier this week due to expectations that Trump's policies would spur inflation and keep interest rates elevated.
Alvin Tan, the Head of Asia Forex Strategy at Royal Bank of Canada, stated, "People are skeptical about whether Trump will actually implement the policies he proposed, especially the tariff policies; however, this sentiment may be temporary, as the market underestimates Trump's influence on trade policy—U.S. Presidents have broad powers to impose import tariffs."