Some investors in asset classes are gradually reducing their enthusiasm for the 'Trump trade' as they question whether Trump will push forward his ambitious tariff proposals after becoming President of the United States.
As of Thursday's close, the dollar has erased most of its post-election gains, and after two days of intense fluctuations, U.S. Treasury yields have also returned to recent ranges. These movements suggest that the market may experience volatility as investors weigh whether Trump's policies align with his campaign promises. With market turbulence settling, the focus is shifting to other major events. A key question for investors is how much of the tariff measures threatened by Trump will become a reality. 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 stimulate inflation and keep interest rates elevated.
Alvin Tan, head of Asia FX strategy at Royal Bank of Canada Capital, said, 'People are skeptical about whether Trump will really 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.' (Golden Ten) #binancepizza