Economic Update – Trump’s Victory and Market Implications

Donald Trump has again won the U.S. presidential race, and his Republicans have reclaimed the Senate. This swift, decisive victory sparked an immediate market rally, pushing the U.S. stock market to record highs and strengthening the USD$. The biggest gains have been in sectors seen as best positioned under Trump’s agenda: financials, energy, technology, and small caps.

In contrast, the bond market is under pressure, with the 10-year U.S. Treasury yield rising about 20 basis points to just under 4.5% as the election results unfolded. Concerns about Trump’s pro-growth, America-first agenda’s inflationary effects also raise questions about the U.S. fiscal position, which appears stretched outside of any economic crisis.

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