Republican Donald Trump was elected the 47th president of the U.S. on Wednesday and he is likely to adopt expansionary fiscal policies, such as tax cuts and increased spending on infrastructure, Sank Manukyan, international markets specialist at IS Investment, told Anadolu.
Manukyan stated that some movement in futures started before the Fed’s rate cut, and this gained further momentum.
He noted that the premium in bond yields increased, which signals that inflation uncertainties persist, and the concerns that the two presidential candidates would not act responsibly on budget deficits, the movement in bond markets further increased.
He added that all eyes turned to the Fed now, as the possible changes in the U.S. government may have an impact on bond yields in the short-term.
TRUMP, VANCE FAVOR WEAKER U.S. DOLLAR
Manukyan mentioned that the U.S. Dollar Index is mixed and Donald Trump and his running mate Vice President-elect JD Vance favor a slightly weaker U.S. dollar.
“If there is a disturbance in the US due to budget deficit, and bond yields rise in response, this would be unfavorable for the dollar,” said Manukyan.
He stated that the stock market’s reaction is also of note, as Trump’s high probability to implement expansionary policies will give a boost.
Manukyan noted that stock markets are still in a positive “mood” and the election may have only accelerated it, although balance sheets from Microsoft and Apple dissatisfied investors.
Meanwhile, he stated that Trump’s approach to Asian economies, especially to China and Hong Kong, would be tougher in trade and politics, and a slowdown may be on the horizon.
“Though, Japan’s relations (with the US) will be stronger since it is a reliable and long-term ally, I think Trump will continue his policy of supporting small Asian countries, but he will maintain his generally negative stance against China,” he said.
GOVERNMENT OFFICIALS ‘NOT FOND OF’ CRYPTOCURRENCIES MAY BE LET GO
Manukyan stated that the crypto market may see a shift in Trump’s second term.
In fact, an about 8% rise was seen in Bitcoin to over $75,000 when Trump inched closer to victory on Wednesday, and Manukyan attributes this rise not only to Trump’s path to win and his eventual victory, but also to billionaire Elon Musk’s presence with him, as Musk played a role during his presidential campaign and he is involved with cryptocurrencies.
“Government officials, such as Gary Gensler, who are not fond of cryptocurrencies may be let go, according to rumors,” he said.
“And even if the upward trend in cryptocurrencies cannot be only attributed to Trump’s victory, I can say for certain that the trend will continue up,” he added.