US: Trump tantrum vs taper tantrum - ANZ

Khoon Goh, Research Analyst at ANZ, notes that the US bond yields and the US dollar continue to rise, as the market sees upside inflation risk in the US from a Trump administration.

Key Quotes

“As a result, Asian currencies continue to come under pressure. Our USD/Asia index has risen to its highest level since late February 2016, and is 1.5% off from its January high.”

“When we compare the current “Trump Tantrum” with the “Taper Tantrum” episode of 2013, we note that this time, USD/Asia is being driven higher by both the rise in US yields and stronger US dollar, as measured by the DXY. Back in 2013, it was only US yields that were driving USD/Asia.”

“During the taper tantrum period, portfolio outflows from Asian bonds and equities totalled USD38bn between June and August 2013. Last week, outflows from Asian equities alone totalled USD3.3bn, so there could be further to go.”

“One difference between the Trump and taper tantrum is that the RMB was still appreciating during the latter period, going against the weakening in Asian currencies. This time, RMB is joining in the broad-based weakening against the USD.”