The Trump Rally is at stake The opposite is true for both the US stock market and the bond market Wednesday is the day DJIA is peaking on Tuesday and down 0.5% and S & P 500 down 0.3% S & P 500 financials are down 1.6% and are returning their recent gains. The banking stocks were the most beneficiary of the expansion of fiscal policy, tax cuts, and regulatory rollbacks after Trump's election.
In addition, healthcare / materials / builders are down on Wednesday.
They were the ones that led the Trump Rally.
The European stock market is also in the same tone. Stoxx Europe 600 fell 0.2% on Wednesday in the same bank stocks decline.
The decline in US Treasury prices has also stabilized. Benchmark on Tuesday was 2.240%. Treasury's interest rate in the US declined to 2.235% on Wednesday, which means buying prices and rising government bond prices
The suspension of government bond repurchases on Wednesday is due to data released by the US Department of Labor in October that US business prices have not gone up. The market atmosphere has changed as we have not seen signs of inflationary pressures.
Changes in the commodity market are noticeable. Copper and aluminum prices, which hit a one-year high in the past week in anticipation of the Trumpf infrastructure boom, dropped by 1.8% and 2% on Wednesday, respectively.
It seems that Wednesday's forces have been ripping off the huge profits of the past in the markets that have been rallying purely by expectation. I think that there was a force that made a tremendous profit, It looks like the market has entered the analysis with a realistic critical eye to the policies.
And will it be possible for the US to produce the promised economic growth and inflation at this time? Dan Tarullo, the Fed governor I told you about yesterday, said that yesterday, the US interest rate is going to rise in December, and as of December FF The figure is 91%.) Hopefully, in the context of the fear that the US rate hike by the Fed in the coming year will be faster than expected
The central bank should be cautious about raising the interest rate, and the Fed's rate hike should be done very slowly. On an extraordinary twisted statement on Tuesday, it sounded like trying to show the presence of dovefarer on behalf of the same dovefie, Yellen. Strangely, Since the announcement, the US stock-inflation skepticism and long-term interest rate hikes have been seen as negative from today's stock market downturn.
It seems like the general is gruesome, but the atmosphere in which interest rate hikers have gained the momentum is finally breaking, and finally the monetary easing lovers are raising their voices.
Trump's current expectations of accelerating global inflation are being coined by Trumpflation in the media. The fact that the 'trump-up' is not enough to change the current picture of the global economy is beginning to happen in earnest It is a critical view.
The bond that led the trading was the bond market. The bond is a very binary financial product. I think all the events are inflationary or deflationary. I think half of the US Treasury's current rate of return in US 10 This is due to this pure inflation expectation.
Critics say this is exaggerated. President or policy can make a U-turn, but there's no U-turn in inflation and economic growth. The president does lip service, but the market is never as easy as it sounds.
Since 2009, the United States and the world are stuck in a low-growth, low-interest rate rut, and Trump policy is a criticism that it will only sound a little rumble.
Trump's remarks after the election was that he would put the world into a fiscal profligacy, which would cut taxes enormously (critics say the tax cut will cost the United States $ 6 trillion in deficits in the next decade I will add tax credits to attract private capital and spend hundreds of billions of dollars on infrastructure construction.
This means that we have overlooked the structural problems of the current global overcapitalization and lack of investment. The Eurozone and China Japan have just collected money without using the money. The surplus on this currency account is about $ 850 billion.
This means that there is a huge amount of money waiting to buy the government bonds that will be the source of funds for the trump deficit.
Trumpflation means that a massive treasury bond is released into the market, leading to a rapid rise in government bond yields and inflation, which is impossible given the enormous global savings.
Even if US Treasuries are loosened, US Treasury rates do not rise easily because money is being planted around the globe to digest it.
Therefore, the sudden surge in interest rates on government bonds will be persuasive, as I said above, that the suspicion is due to short-term market distortions by the forces.
Trump's idea of making huge deficit debt and raising commodity prices is supported by the same Republican senator's remarks on the prospect that this will not have much impact
Republican Kevin Brady, chairman of the House tax-writing committee, said on Tuesday that tax overhaul is not aimed at fiscal deficits, which is a reminder that Trump's massive tax cut plan is not recognized by the Republican Party.
I also expect the tax cut plan to have little growth effect.
Most of the tax cuts will come to businesses and rich people, which means they do not have tax bills and decide on the amount of spending. They do not spend more money on taxes.
Although low corporate tax rates could stimulate investment and growth, critics say the effects are uncertain and very slow
Trump suggests that an enormous tax cut of $ 4 trillion will be made, which will only contribute to growth in the next three years by 0.2 percentage points. Estimated by an organization called Macroeconomic Advisers. Is going to face upcoming problems seven years ago, but there are not many large-scale project projects to try to make an infrastructure investment (= there are not many shovel-ready projects.)
Koreans are very familiar with the above shovel-ready projects.
It is the four major rivers of the government at the time of the Lee Myung Bak government. The United States is going to revive the economy by doing the four major rivers.
Unlike in 2009 when Obama's fiscal stimulus was implemented, the US economy is now nearing full employment with no capacity (= 5% unemployment). There is no fiscal stimulus to do, assuming inflation is going to work under these conditions It's called premature.
Over the past decade, inflation has been stubbornly stubborn, maintaining very inertial conditions at very low levels.
I think that the low inertia will not change even if the unemployment rate falls below the natural level. So the saying is that Fed Chairman Janet Yellen's September High-Pressure Economy Yongin I wrote it in the article.
Yellan's "high-pressure economy Yongin" means the Fed actually does not want to raise interest rates
It was a reminder of Tuesday's announcement that it was in the new version after receiving the position of Yelhn.
"I do not think we should say, even if there is going to be a fiscal stimulus, we know that will translate into such an increase in inflation."
Simply putting the key to it, fiscal expenditure can not be seen as raising inflation.
The rate hikes in December could be immediate, but in the long run, we see an acceleration in aging and lower productivity (= I wrote in the previous article that it is difficult to raise interest rates because of the 'natural rate cut' in terms of the second factor Fisher) Interest rates suggest that the rise will be curbed
Rather than financial spending, there is a prospect that inflation will be triggered by Trump's anti-globalization policy. Goldman Sachs estimates China and Mexico can hit 0.25 percentage point inflation by 35% to 45% on tariffs and 2.5 million illegal The forced deportation of immigrants can cut inflation by an additional 0.1 percentage points,
But Trump says he can not really go that far.
The tariffs and threats against China and Mexico are literally going to be leveraged to take advantage of trade talks with them, and the market is not likely to wage a trade war
The pledge of illegal immigration is changing.
Right now, when China and Mexico become enemies, they do not return from the US economy.
The Fed is now the most powerful, smart and independent central bank in the world.
Not Trump, but the Republicans are constantly displeased with the Fed's easy money policy and are trying to control the Fed's monetary policy under parliamentary scrutiny
It's no wonder the Fed is against it. Yellan, Fischer, Turulo. These people are fighting whenever the Republican Party tries to restrain the Fed in parliamentary oversight. It's fighting against the central bank's independence that it's sacrosanct. It's in this context.
This is, frankly, the history of the United States showing that inflation has intensified when the regime overruns the Fed's independence. During the administration of Lyndon Johnson and Richard Nixon, the Fed swung into political pressure, which was the time of the greatest rise in US history. Fed Chairman Arthur Burns caused massive inflation in the world at the time, and as the Fed chairman succeeded Paul Volcker in the future, the Fed tightened its monetary policy and the world economy became extremely depressed.
Perhaps this history teaches that if Trump drives out Yellen and sees his grandfather as Fed chairman, then Trump may be a "strong US" era that will achieve a rapid rate hike in achieving the high inflation he wants