How will a possible Trump victory affect the markets?
Wall Street strategists are voicing expectations for persistent inflation and higher bond yields after Donald Trump's victory.
Morgan Stanley strategists, including Matthew Hornbach and Guneet Dhingra, expressed the view that long-term bond yields will rise more than short-term ones.
According to Bloomberg HT, strategists said that Trump's victory could mean more interest rate cuts and fiscal expansion from the Fed, and that this would put upward pressure on long-term bond yields.
Barclays strategists Michael Pond and Jonathan Hill stated that the best response for investors to the Trump victory is to hedge against inflation. According to Barclays, five-year bonds indexed to inflation will perform better than standard five-year bonds.
Goldman Sachs, on the other hand, stated that contrary to the general belief that the yield curve will steepen with the rise in long-term yields, a horizontal yield curve scenario may occur with the Trump victory.
Goldman strategists, including George Cole and William Marshall, think higher Trump tariffs will negatively impact growth.
