Trump won. Already, less than a month in, it has a somewhat inevitable feel to it. After Brexit I don’t think I can be shocked by politics any more, but from a market-watchers’ perspective the reverberations haven’t all been what I expected.
I had thought the USD would fall a bit. It hasn’t. Well, OK, it fell about 2.8% versus Sterling but it’s up against the Euro and the Aussie.
I had thought US equity markets would fall (from protectionism, policy freefall, etc) but in the shower the next morning the biggest driver seemed to be Trump’s seeming determination to reduce US corporation taxes to 15%; the subsequent market rally suggests I’m not the only person focusing on the impact this could have on equity valuations.
I hadn’t really thought about bonds. But of course (hah! Ed.) with Trump suggesting a massive increase in the US fiscal deficit and national debt, along with a potential infrastructure boom, interest rates are on the way up. The US bond indices fell almost 3% in the month, the third month in a row that bonds have fallen in the UK and the US. UK bonds, which account for 20% of my target weighting, are down almost 9% since August; this alone has hit my portfolio by about 2% over the last three months. But let we become too fussed by end-of-the-bond-bubble chatter, bonds are still up during the year.
