“Trump trades” appeal fades as the U.S. Dollar loses post-election momentum.
The value of assets tied to President-elect Trump, together with those perceived as likely to benefit from his administration, surged immediately after his win.
Bitcoin and Wall Street shares hit record highs as U.S. shares posted the biggest gain in eight years, and Bitcoin skyrocketed past its previous ATH of $73.5K to touch 77K. The dollar also surged 1.65% against a host of other currencies, including the Japanese Yen, the Euro, and the pound.
Investors in some asset classes are pulling back from their “Trump trades” as the dollar lost its post-election gains. They question whether Trump will go through with his ambitious tariff proposals.
Treasury yields also returned to pre-election ranges after the 10-year and 2-year Treasury yields went up 4.49 and 7.7 basis points, respectively, after Trump’s win.
Donald Trump wants Robert Lighthizer back to take charge of US trade. The man who led Trump’s trade war against China during his first term is being tapped to make a return as U.S. Trade Representative (USTR).
Lighthizer wanted a different role in the administration though, something more like Commerce Secretary or maybe even Treasury Secretary. But Trump isn’t offering Lighthizer options. It’s the top trade job or nothing.
And for those familiar with Trump’s economic style, that means a return to the same aggressive, “America First” trade policy that put allies and rivals on edge.
Donald Trump’s unexpected election win over Kamala Harris is already shaking up the markets, and with Lighthizer back on board, it looks like a second Trump administration will go all-in on trade war tactics.
Speaking to a crowd of supporters in Florida, Trump called his victory an “unprecedented and powerful mandate” that would bring about a “golden age of America.”
He’s lining up steep tariffs, tax cuts, deregulation, and an “America First” agenda that doesn’t exactly leave room for compromise. Analysts are already scrambling to figure out how far Trump will push his agenda, especially in trade.
Across the globe, Asia is preparing for a similar blow. Analysts at Macquarie Group didn’t sugarcoat it, calling Trump’s win “bad news for Asia.” While Asia might be more prepared this time than in 2016, the threat of higher tariffs still looms large, especially for China.
A key point in Trump’s campaign was hiking tariffs on Chinese imports, and analysts expect this to stir up volatility across Asian markets. The Chinese government, however, might not take it lying down; they’re already preparing stimulus measures aimed at hitting 5% economic growth.