Some investors in certain asset classes are gradually reducing their enthusiasm for the 'Trump trade' as they question whether Trump will push 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 volatility, U.S. Treasury yields have also returned to recent ranges. These moves suggest that as investors weigh whether Trump's policies align with his campaign promises, the market may experience fluctuations. As market turbulence subsides, attention is turning to other significant events. A key question for investors is how much of the tariff measures threatened by Trump will materialize. Some are also taking profits, including trades that bet on a stronger dollar and weaker Treasuries, which performed well earlier this week on expectations that Trump's policies would stimulate inflation and keep interest rates elevated.
Alvin Tan, head of Asian foreign exchange strategy at Royal Bank of Canada, said, 'People are skeptical about whether Trump will really implement the policies he has proposed, particularly the tariff policies. However, this sentiment may be temporary, as the market underestimates Trump's influence on trade policy— the President of the United States has broad powers to impose import tariffs.' (Jin Shi) #binancepizza