As markets continue to respond to Donald Trump’s presidential election win, the effects of his anticipated economic policies are already visible globally. A rally in bitcoin, a rise in Treasury yields, and a stronger U.S. dollar all signal that traders expect substantial changes in the economic landscape.
Despite expectations of a Federal Reserve interest rate cut next month, the dollar recently reached a one-year high, driven by the confidence in Trump’s proposed tax cuts and infrastructure plans. While these initiatives may bolster the economy, they could also lead to larger deficits, raising long-term borrowing costs and pushing Treasury yields higher.
Trump’s proposed import tariffs, aimed at protecting domestic industries, are also expected to drive inflation, creating potential challenges for the Federal Reserve’s monetary policy decisions. With the Republican Party likely to control both Congress and the executive branch, Trump’s influence on trade and economic strategy will be substantial.
On the other side of the Atlantic, European markets are focused on the second estimate of Q3 GDP growth and third-quarter employment data. Preliminary data from October suggested moderate growth, though challenges in manufacturing and low household spending remain.
Later today, Fed Chair Jerome Powell will share his outlook following the release of the October producer price index (PPI), an indicator closely linked to the Fed’s preferred inflation measure, the personal consumption expenditures index. However, Powell’s comments will likely be conservative, given the market uncertainty surrounding Trump’s future policies.
Key events today include:
- Euro zone Q3 GDP update
- Euro zone Q3 flash employment
- U.S. weekly jobless claims
- U.S. October PPI
- Fed Chair Powell’s speech