The ‘Trump Rally’ faded, to close out the week, with equities coming off recent record highs and US Bond Yields resuming the rise. The Fed Chairman Powell was dovish in his latest speech, recognising the new administrations strong pro-growth policies, would allow the Fed to cut rates at a more leisurely pace. The US rising bond yields since the Fed began the rate cutting cycle, was evidence the markets were not convinced as to the Fed’s sincerity, in the first place. Powell will be under extreme political pressure, as Trump is not a fan of elevated interest rates, holding back the projected economic boom. Trump made this clear in his last term of Presidency and is probably not in the mood to allow the Fed to spoil his party, this time around. Trump appointed RFK to Health and Human Services, and this was poison to ‘Big Pharma’ stocks, plunging in Friday’s trade. The US Dollar remains strong, with the EUR floundering around 1.0550, while the GBP plunged to 1.2620. The UK GDP growth number was insipid and puts the economy back towards recession territory, while Industrial and Manufacturing Production, continues to contract. The Labour Governments budget is bearing rotten fruit.
The strong reserve pummels the commodity currencies, with the AUD trading around 0.6450, while the NZD crashed to 0.5850. The relentless rise of the reserve is supported by elevated US Bond Yields and a bearish Federal Reserve. This coming week will look at inflation and growth, while the Bank of China makes their latest interest rate decision.
