Trump’s win sparked euphoria in markets, now comes the real test
Donald Trump’s victory in the November US presidential election sparked an immediate rally in markets, with stocks flying, the dollar soaring and Bitcoin leaping off the charts. But just two months later, the Republican is set to return to the White House, and only some of those trades endure.
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The reversal was first apparent in the stock market, where the S&P 500 Index gave back a solid chunk of its “Trump bump” as investors began to question the Federal Reserve’s anticipated interest rate cuts and what the new administration’s policy proposals will mean for share prices. The Treasury yield curve has also steepened sharply since late November after flattening initially. Meanwhile, Bitcoin and the dollar have held their gains.
But the real test for these bets comes now, as Trump takes office. Tariffs are the biggest risk, sparking fears that the administration’s plans could lead to more prolonged and unpredictable trade wars than during his first presidency. Wall Street pros also worry about how any actions on immigration will affect the US economy. And they fear heightened geopolitical tensions with Trump already taking aim at some traditional US allies like Canada, Mexico and Europe.
“Forecast is the polite way to say guess, but we have to make assumptions about these
