Markets adjust to Trump

Yesterday’s markets

11th November 2016

  • CAD NHPI m/m: 0.2%
  • USD Unemployment Claims: 254K
  • USD FOMC Member Bullard Speaks
  • RBA RBA Assist Gov Debelle Speaks
  • EUR Italian Industrial Production m/m: -0.8%

Markets continued to digest Donald Trump’s shocking win earlier this week. Republicans now have the majority of the power and markets are beginning to adjust to that fact. Safe haven flows were high yesterday and emerging currencies continued to weaken, whilst the Euro also fell across the board. One of the first places the new administration’s weight might be felt is at the Federal Reserve. The probability of a Fed rate rise yesterday fell to below 50% before retracing back up to around 80% yesterday afternoon. Markets are worried that some of Trump’s policies may prove to be inflationary, which has boosted the probability of a rate rise.

Closer to home, Prime Minister Theresa May and President-elect Donald Trump have spoken by telephone. May’s office confirmed yesterday afternoon that they plan to affirm the special relationship between the two countries. Trump has also invited Theresa May to Washington DC, saying that it will be a “great honour” to welcome her to the White House. Trump also said the relationship should mirror that of Margaret Thatcher and Ronald Reagan.

Today’s markets

10th November 2016

  • USD FOMC Member Fischer Speaks
  • USD Prelim UoM Consumer Sentiment
  • CAD BOC Gov Poloz Speaks
  • EUR German Final CPI m/m
  • GBP Construction Output m/m

Friday is likely to be a relatively quiet end to a very volatile and entertaining week. The only notable piece of high tier data due to be released will come from the States in the form of US Michigan consumer sentiment which is forecast to increase to 87.4.