U.S. assets reacted in a see-saw fashion to Donald Trump’s victory. Stock futures first dove deeply before climbing up to strong gains as investors developed a view on what kind of economic policy president-elect Trump is likely to pursue. They seem to be pricing in an expectation of higher growth and inflation, as well as an earlier Federal Reserve exit from ultra-low interest rates and from holding U$ 4.45 trillion of Treasury bonds.
Shock waves hit international financial markets leading to a rotation into equities and away from bonds. While global equities gained about U$ 1 trillion, global bonds lost close to U$ 1.2 trillion – according to Bloomberg. However, emerging markets have suffered from capital outflows, currency depreciations and losses in both equity and fixed-income markets, anticipating tighter monetary conditions and a potential “tariff tantrum”.