巴克莱银行G10Investor enthusiasm for the 'Trump Trade' has waned, partly because Trump's tariff policies have not been as aggressive as many anticipated. More concerning is that Trump's erratic attitude may begin to undermine confidence in the USA economy, which in turn affects market optimism about Trump's election.
Last year, when Trump just won the election, his tariff and tax cut plans pushed up inflation and interest rate expectations in the USA, causing the USD and US bond yields to soar. However, this year, the situation has begun to develop in the opposite direction.
Since the beginning of January this year, the USD has fallen by 0.4%, and the 10-year US bond yield has also come down from the top reversal of 4.8% to around 4.5%. This reversal seems to indicate that the market's enthusiasm for the "Trump Trade" appears to be fading.
Barclays G10Forex TradeCo-Head Jerry Minier stated: "Despite the feeling that it may not be so, if we look back from the beginning of this year, many of the 'Trump trades' have not worked out. This has prompted a reevaluation of the market."
Analysts believe that investor enthusiasm for the 'Trump Trade' has waned, partly because Trump's tariff policy has not been as aggressive as many had anticipated. More concerning is that Trump's erratic attitude may begin to undermine confidence in the USA economy, which in turn affects market optimism following Trump's election.
David Kelly, Chief Global Strategist at JPMorgan Asset Management, points out that the US bond market is currently in a dilemma: on one hand, there are concerns that the trade war initiated by Trump may lead to rising inflation, while on the other hand, there are worries about a slowdown in the USA or global economic growth.
Meanwhile, as the USD weakens, Emerging Markets currencies are performing remarkably well, rebounding significantly from their lows. Since the start of Trump's second term, the Chilean peso has appreciated over 3% against the USD, and the Colombian peso and Brazilian real have appreciated over 6% against the USD.
Bank of America believes that the market's expectations for the USD to strengthen have become excessive, making valuations in Emerging Markets very attractive. David Hauner, head of Global Emerging Markets Fixed Income Strategy at the bank, stated: 'Current positions are very extreme, and much of the tariff noise has already been priced in by the market.'
Editor/ping
