The Trump trade has dominated the markets since the Republican’s surprise election victory. Bonds have sold off on expectations of inflationary economic policies and equities have soared to fresh highs on hopes of lower taxes boosting earnings. Emerging markets have come under pressure and the US dollar hit 14-year highs.

But has the Trump effect on the markets run its course?

After 12 days of president-elect Trump there are signs that the Trump trade is running out of steam.



In the wake of the election the yield on the US 10-yr Treasury soared 25%, from a low of 1.78% on November 4th to a high of 2.35% by November 18th. However by Monday, November 21st the yield had retreated somewhat from that peak to around 2.3%. Not exactly a reversal but a sign perhaps that the bond bears are pausing for breath as Trump selects his cabinet.



The US dollar was also coming off its recently-struck highs. The dollar index faded to the 101 handle, around half a percent off last week’s top, which was its strongest since April 2003. Still the dollar has capped its best two-week gain in almost two years, climbing 7% since Trump’s election.

By Monday, USDJPY tripped to around 110.7, having broken through the 111 level in the Asian session.


Emerging market currencies also looked to claw back some ground lost since November 9th. USDZAR was trading 1% lower on the day on Monday at around 14.3.



The strong dollar has heaped pressure on commodities priced in greenbacks but we’re seeing evidence of a pullback now. Oil has recovered from two-month lows last week as rumours of an Opec output deal do the rounds again. Nymex crude December futures were up at the $47 handle, having sunk as low as $43 a week before.

Investors sold off gold after Trump’s win but that trend has eased. Having sunk to $1,200, gold was trading a little higher at close to $1,217 by Monday morning’s European session.


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