"The heat of the 'Trump Trade' cools down, investors question the feasibility of tariff proposals"
According to Jinshi data, investors in some asset categories are gradually reducing their enthusiasm for "Trump trades" because they question whether Trump will promote his ambitious tariff proposal after becoming President of the United States. As of Thursday's close, the dollar has wiped out most of its gains since the election and, after two days of violent fluctuations, US bond yields have also returned to recent ranges. These actions suggest that market volatility may occur as investors weigh whether Trump's policies match his campaign promises. As market turbulence subsides, focus is shifting towards other major events.
Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore said: "Even the most enthusiastic 'Trump trade' investors are now taking a step back and thinking about whether the stakes are too high at this point? Traders are considering execution issues and how some of his policies can be effectively communicated." A key question for investors is how much of Trump's tariff measures will become reality. Some people are also cashing in profits from bullish dollar trades and bearish government bond trades which performed well earlier this week due to expectations that Trump's policies would stimulate inflation and keep interest rates high.
Alvin Tan, Head of FX Strategy Asia at Royal Bank Canada Capital Markets said: "People doubt whether Trump will really implement his proposed policies especially on tariffs; however this sentiment might be temporary as markets underestimate Trump’s influence on trade policy - The U.S president has extensive powers to impose import tariffs".
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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