Two of the liquid markets in the world bonds and shares have taken paths radically different from the election of President Trump. The divergence is very strong so much so that the signals that both markets send to the investors on the possible future that next point to two irreconcilable realities.
However, the future is for now a first-degree equation and unfortunately has a single solution, often-unpredictable yes. What will be the market that will have to correct its evolution and intoning? The answer will in the coming weeks but today we analyze and to you the origin and possible resolution of this asymmetry of the market which inevitably soon be resolved in one way or another.
The background that has brought us here
Truly, it is not the intention of this article to tell them the reason for the decline of the bond market and the rise of the stock market. Surely, you are already reading all kinds of analysis that justify the trends of both markets. This analysis aims to focus on describing what the current scenario what are the possible outputs, which can choose the market are and what the potential consequences of each possibility on the table.
With a merely introductory eagerness, here I will simply summarize that the stock market is trading upward with expectations that a strong government is about to enter the White House. Above all, you already know how dependent the market has become the stimulus measures. And that is nothing more or less what the bags are trading as a safe economic policy by Trump: a policy of fiscal stimulus party that would pursue rekindle growth.
On the other hand, what the bond markets are trading lower it is the real possibility that the policy of fiscal stimulus Trump, just finished bringing higher inflation and with it an increase in interest rates . Precisely for this reason the dollar rises in parallel because higher rates would attract inflows of money into the country which translates into a purchase of dollars in the currency markets, as investors would turn to the US debt markets In search of that juicy increase in profitability.
Actions: Like a Trumpet Rocket
What are we going to tell you that you do not know about the recent evolution of the stock markets since the controversial US elections? I did this twit, whose link including here. This probably meant nothing more than the decisive hidden vote that made Mr. Trump not appear well in the photo of the polls being published. Finally, although this was unknown at the time, he did so in a proportion that decisively tilted the balata in favor of the tycoon.
The vote to Trump was socially censored in many circles, reason why, before a human, the respondent did not feel comfortable recognizing his vote in favor of the Republican. However, before an automatic menu the respondent found it much easier to honestly recognize his true decision. Although I must acknowledge here that, what did surprise a server was the reaction of the stock markets (not the bond market). The surprising response of the stock markets of bars and stars to the resolution of the election date has been upward, cheering cheers on the Republican’s future arrival at the White House. In fact, the exact figures of appreciation from the election last November 8 and until today show a staggering rise in the Dow Jones nearly 12%