The positive reaction of US equities, driven by banks and cyclicals, and the US Dollar to US Presidential elect Trump’s shock victory at the expense of Treasuries, reflects increased market expectations of a reflationary US policy stance (increased infrastructure, tax reforms and reduced regulations) over the medium-term. However, key posts for Trump’s administration have not yet been announced and the mediumterm policy outlook is clouded, so the initially favourable US market response to latest developments may prove premature.

Felix Martin