Markets Expect the Best and Dismiss the Worst Parts of the Trump Plan

The “Trump Trade” has started to fade

Highlights

• The “Trump Trade” has started to fade

• Chinese stimulus measures are not (yet?) feeding into macro data

• Markets are more hawkish than the Fed or U.S. households

• The yen carry trade may be coming under pressure again

Key Takeaways

Trump Bump in the Rear View Mirror

• The “Trump Trade” has faded with the selection of a “grownup” team for key economy posts — Treasury yields, the U.S. dollar, and market-based inflation expectations have all partially or fully reversed their post-election moves (only equity markets and Bitcoin haven’t got the message yet).