27th February 2017
Backtrack on Trump Trade
This week the driving factor behind most of the returns for the year so far has been thrown into doubt.
The “reflation trade”, which is industry speak for betting big on Donald Trump spending on infrastructure and cutting taxes, has been called into question – with some analysts doubting the ability of the administration to get much legislation passed before the end of the year. While the rebuttal is almost as weak as the original commitment, it’s good to see people questioning the decision to base a whole investment strategy on something as flimsy as a Trump promise.
Elsewhere, the recognition that there is still a lot of economic uncertainty has also impacted other markets. This week the 10-year gilt yield has finally returned to the level it was at before Trump’s election and inflation mania took hold. It appears that the initial optimism around the return of inflation and higher growth rates has been tempered by the reality that there is as much chance of things getting worse as there is of them getting better.
Follow the link to read our Full Market Commentary below.