020 7898 0500This week has seen US Treasury bonds increase as the expectations of high borrowing and inflationary economic policies under Donald Trump begin to take effect on markets. We have seen a shift away from safe-haven buying as the markets believe that as the Republican Party hold the presidency, the Senate and Congress it will be easier for them to get legislation passed.
Yesterday saw only speeches by Federal Open Market Committee (FOMC) members Williams and Bullard, and the Federal Reserve budget balance. However, the ongoing unwinding of the actual reality of a Donald Trump presidency meant that the dollar fell significantly against sterling and weakened slightly against the euro. This marked a slight ebb in investor confidence as capital flows exited the US, suggesting that general sentiment is slightly negative on the US’s economic health under Donald Trump.
Today sees a speech by FOMC member Fischer, and a raft of data from the University of Michigan, including consumer expectations and sentiment, as well as the inflation expectations over five years. This is, however, not high-impact data.
Any indication from the FOMC on what the committee’s future plans are will be of interest to investors, as Trump had been highly critical of them over the course of the campaign in calling for a more hawkish attitude. Any hints at intervention by Donald Trump in the Federal Reserve’s independence will likely to see dollar weakness as investor confidence falls.
