US aims to double GDP growth to 3-4% via tax cuts - Rabobank

In the US, President-Elect Trump’s Treasury pick Mnuchin has wasted no time in making bold statements as noted by the Michael Every, Head of Financial Markets Research at Rabobank,.

Key Quotes

“He aims to double US GDP growth from an average of 2.1% post-2009 to 3-4% via tax cuts (which will be for the middleclass, which is demand-boosting, rather than top earners as previously promised, which is demanddestroying). That’s a negative for Treasury yields in terms of supply.”

“Moreover, Mnuchin talked about issuing new 50- and even 100-year maturities, so more supply. On the China “currency manipulator” front, which would be inflationary (from tariffs) and deflationary (from a drop in CNY?) he was less confrontational than Trump’s campaign rhetoric. That news-flow saw the USD index surge again, rising as high as 101.8; indeed, USD/JPY was at 114.50 this morning in Asia when we were set for a test below 100 so recently. The Fed’s Beige Book last night already spoke about “headwinds” from the stronger USD. Those now look like becoming a gale.”