17 November 2016: Ain’t no…
– The consequences of Donald Trump’s election victory will be a focus for markets over coming months as the new president-elect sets his agenda.
– Expectations of fiscal stimulus by a Trump administration have caused fixed income markets to shed more than USD 1 trillion of value. This may mark the end of a multi-decade bond rally. But we do not expect global yields to rise too far or fast.
– EM currency and equity markets have suffered since the election result. But EM economic and earnings fundamentals remain positive.
– We have introduced an overweight euro position versus the US dollar. Falling US real interest rates, as inflation picks up, will put downward pressure on the dollar versus the euro. We also close our overweight position in US investment grade debt against high grade bonds.