Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

US bullish post-Trump, rate hike imminent

By Jack Derwin · November 24 2016
Reading:
egg
egg
egg

Retirement

US bullish post-Trump, rate hike imminent

By Jack Derwin
November 24 2016
Reading:
egg
egg
egg
us bullish post trump rate hike imminent

US bullish post-Trump, rate hike imminent

author image
By Jack Derwin · November 24 2016
Reading:
egg
egg
egg
us bullish post trump rate hike imminent

The knee jerk sell-off following news of Donald Trump’s presidential win seems to have faded, with markets factoring in a US rate hike next month with near certainty.

After a couple of weeks, some of the impact of a Trump presidency is now apparent, says investment firm Instreet.

“Sectors such as construction and banks have done particularly well as investors expect the new president to deliver a surge in infrastructure spending and a lighter regulatory touch,” Instreet managing director George Lucas said.

“The possible economic leg-up that the market believes Trump’s policies will deliver has also put a spark under the US dollar. In turn, investors have fled government bonds on expectations the US Federal Reserve may need to raise interest rates faster than expected to contain inflation.”

The short-term outlook appears largely positive, as US bonds rally to their highest point in a year.

Advertisement
Advertisement

“Ten-year US Treasury yields are at a 12-month high after climbing around 40 basis points since the election,” MR Lucas said. 

This market reaction now means a December rate hike looks likely.

“Chair of the Federal Reserve Janet Yellen backed this up last week when she said an increase in short-term interest rates could ‘become appropriate relatively soon’,” Mr Lucas said.

“We believe solid US data is also supporting the case for tighter monetary policy. Markets are now expecting a rate rise in December, with the federal futures market implying a 95 per cent probability of a 25 basis points hike at the FOMC meeting on 14 December.”

HSBC chief economist Paul Bloxham said this is consistent with his view that the Fed is on a slow path of rate hikes over the next couple of years. 

“We’re of the view that the Fed is on a hiking path but it’s a very, very mild one. The Fed will lift rates in December this year, December next year and again at the end of 2018,” Mr Bloxham said.

“We think rates are going to go higher but we think it’s going to be a very slow path to higher rates.”

US bullish post-Trump, rate hike imminent
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Nest Egg.

Read more

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.