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“特朗普交易”熄火,市场在担心什么?

"Trump trade" fizzled out, what is the market worried about?

wallstreetcn ·  Nov 8 17:14

After Trump's victory, the 'Trump trade' gradually cooled down as investors began to doubt whether Trump would truly push forward his proposed radical tariff plan during his presidential term.

As of Thursday's close, the rapid surge of the USD after the election has basically retraced, with the USD index now at 104.465 as of the time of writing. The US bond yields have also returned to the recent normal range after two days of fluctuations.

These market fluctuations indicate that investors are cautiously weighing whether Trump can fulfill his campaign promises. Market attention is gradually shifting to other key factors, including the Fed's loose policy path and possible fiscal stimulus measures in other countries.

Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank in Singapore, stated:

"Even the most enthusiastic Trump trade investors are taking a step back to think: Are the bets excessive at the moment? Traders are contemplating how to execute, and effectively communicate some of his policies."

The market is swiftly arbitraging while profits can still be locked in.

Earlier this week, the 'Trump trade,' which included bullish bets on the US dollar and bearish bets on US treasuries amid expectations of Trump's policies stimulating inflation and maintaining higher rates over a longer period, remained active.

Over time, market sentiment towards Trump's policies is gradually cooling off. Assets under the 'Trump trade' have basically consolidated sideways post his victory.

This is because the market is quickly arbitraging while it can still lock in profits, as everything will change again once Trump's economic plan is finalized. The reform measures he proposes may take the world's largest economy into uncharted territory.

Daniel Alpert, Managing Partner at Westwood Capital, said:

"People don't want to miss out on profit opportunities, so they rush into the market to buy things that can be quickly sold before the market crashes. This market still has great volatility. I believe that as situations change, these trades will see significant reversals."

Market concerns: How likely are Trump's policies to become reality

A key question in investors' minds is how likely Trump's tariff threats are to materialize.

Alvin Tan, Head of Asia Forex Strategy at RBC Capital, said:

"Many people doubt whether Trump will actually implement the policies he has proposed, especially tariff policies. However, this sentiment may be temporary, as the market underestimates Trump's trade policy - the US President has broad powers to implement import tariffs."

Analysts believe that if the Republicans continue to control the US House of Representatives, a resounding victory will pave the way for Trump's tax cuts, immigration, and trade policies. If Trump fulfills his campaign promises, the US may see larger deficits and soaring inflation, immigrant workers being deported, which could lead to a significant drop in economic growth.

"What I least want to see is that his blanket tariff policy really succeeds," Alpert said:

"If the Republicans win, there will be absolutely no limits on the tariff policy that Trump can implement. If he really does this, prices of domestic goods and some services will rise, while the employment situation will not see overall improvement."

"None of this is a good model for the future," pointed out Art Hogan, Chief Market Strategist at B Riley Wealth Management.

"But the future is not now."

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