A ‘Huge’ night in the USA, with President Trump winning the Presidency, once again! This was celebrated by markets with a rally in equities not seen in a long time. The Dow surged more than 1,300 points, or over 3%, in gains. The Trump rally was a vote of confidence in the incoming President’s economic policy. The US 10-year bond yields also surged to 4.45%, ahead of the Fed’s interest rate decision, set to be announced tonight. The Fed is expected to cut, by 25 basis points, but who knows how they will interpret the Trump Presidency. The US Dollar also shot up, with the EUR falling to 1.0700 overnight, while the GBP plunged to 1.2840.
The soaring reserve hit commodity currencies hard, with the AUD plunging to 0.6520 at one stage, while the NZD crashed back towards 0.5900. Markets were exuberant and celebratory. All eyes now turn to the Fed, who may well take a dim view of surging bond yields and promised tax cuts. If the Fed look to spoil the party, by leaving rates ‘higher for longer’, they could dampen market enthusiasm and confirm market fears.
