Donald Trump’s dominant win and return to power, and possible Republican sweep of Congress, are creating notable reverberations in financial markets. We are seeing what looks like a relief rally, perhaps mostly because we have a clear winner and there is no longer a concern about a stalemate and constitutional crisis.
Overseas markets have been firm generally, except Hong Kong and China. The dollar is rallying significantly. Trump has threatened to amp up tariffs, building on those he put in place in his first term and were kept under Joe Biden, and has clearly placed China most squarely in his sights.
U.S. stock prices are surging 2-3% higher this morning. Relief is at play, as noted, among other factors including optimism that the 2017 corporate tax cuts will be extended in 2025, preserving profit margins.
Bond prices are weakening markedly. The possible red sweep may enable more aggressive fiscal policy, and the Trump agenda has been generally perceived to be far more expensive and deficit/debt-heavy than what Kamala Harris’s would have been. The implied surge in supply of Treasury bond issuance has pushed rates higher; the 10-year Treasury yield this morning is up to about 4.45% vs. 4.3% yesterday.
Commodities such as gold, silver, and oil are down, along with the VIX volatility or “fear” gauge – the last by 23% as this written — here again tied to relief that the election has been resolved without mystery.
Thayer portfolios are well allocated and we feel positioning is generally appropriate. We are slightly overweight the U.S., and well invested in equities tactically. Bond allocations are still conservatively short compared to benchmarks. Gold gains were taken recently.
Going forward, we will have to see whether the House indeed stays red, ensuring the sweep and possibly more tools for the Trump agenda. We also will need to get more detail on Trump’s agenda itself, including on inflation and immediate course changes in foreign policy. This will keep us busy.
As always, we aim to keep the long-term investment objective in mind, while maintaining the discipline of diversification and tactical management.
We’ll be back as events dictate.
David S. Beckwith, Chief Investment Officer
Post-Election Markets
Donald Trump’s dominant win and return to power, and possible Republican sweep of Congress, are creating notable reverberations in financial markets. We are seeing what looks like a relief rally, perhaps mostly because we have a clear winner and there is no longer a concern about a stalemate and constitutional crisis.
Overseas markets have been firm generally, except Hong Kong and China. The dollar is rallying significantly. Trump has threatened to amp up tariffs, building on those he put in place in his first term and were kept under Joe Biden, and has clearly placed China most squarely in his sights.
U.S. stock prices are surging 2-3% higher this morning. Relief is at play, as noted, among other factors including optimism that the 2017 corporate tax cuts will be extended in 2025, preserving profit margins.
Bond prices are weakening markedly. The possible red sweep may enable more aggressive fiscal policy, and the Trump agenda has been generally perceived to be far more expensive and deficit/debt-heavy than what Kamala Harris’s would have been. The implied surge in supply of Treasury bond issuance has pushed rates higher; the 10-year Treasury yield this morning is up to about 4.45% vs. 4.3% yesterday.
Commodities such as gold, silver, and oil are down, along with the VIX volatility or “fear” gauge – the last by 23% as this written — here again tied to relief that the election has been resolved without mystery.
Thayer portfolios are well allocated and we feel positioning is generally appropriate. We are slightly overweight the U.S., and well invested in equities tactically. Bond allocations are still conservatively short compared to benchmarks. Gold gains were taken recently.
Going forward, we will have to see whether the House indeed stays red, ensuring the sweep and possibly more tools for the Trump agenda. We also will need to get more detail on Trump’s agenda itself, including on inflation and immediate course changes in foreign policy. This will keep us busy.
As always, we aim to keep the long-term investment objective in mind, while maintaining the discipline of diversification and tactical management.
We’ll be back as events dictate.
David S. Beckwith, Chief Investment Officer