US Elections: To the Victor go the spoils - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that the Trump election has unleashed a range of significant moves in global markets and the USD has risen sharply against most currencies on hopes he will generate rapid growth in infrastructure spending and cut taxes.

Key Quotes

“He is also expected to move more quickly to change the tax code to encourage USA companies to repatriate offshore earnings. Global bond yields have shot up, lifting the USD against low yielders (JPY, Gold, and EUR) and weakened a range of high-yield commodity and emerging market currencies on unwinding of carry trades.”

“His anti-trade, anti-globalization views have further undermined trade dependent emerging market currencies, more so in Asia and Latin-America.  While his conciliatory tone towards Russia has lifted Russian equities. Rising fear of anti-establishment political movements has weakened Italian bonds and the EUR ahead of the 4 December Italian election and national elections next year in several key Eurozone countries, while the GBP has recovered lost ground as the impact of Brexit seems less of a special case.”

“His support for winding back Dodd-Frank regulations on US banks, and the steeper yield curve has lifted financial sector equities sharply, while his anti-trade rhetoric has undermined Asian equities and multinational info-tech company share prices in the USA. Industrial metals prices have shot-up in hopes of more infrastructure spending, helping lift material equities, but energy prices are weaker, in part because Trump is a climate change denier that supports the further development of the US fossil fuels sector.”