What’s happening? 26-11-2024
Dollar restored its upside momentum after Trump announced his intention to impose 10% and 25% tariffs on all products and services coming to the United States from China and Mexico. The news increased risk aversion in financial markets, which supported the greenback to ascend.
Trump’s statements also took the opposite direction of his pick for the treasury department pick. After nominating Scott Bessent, who is seen as moderate regarding trade policies, the headlines about the additional tariffs aroused doubts about mitigating the effects of Trump’s trade policies even with Bessent in the Treasury Department. ???.
Euro lost steam pressured by dollar rally after the statements of the additional trade restrictions had been announced. ?But could restore its uptrend on inflation expectations which suggest that price growth in the Eurozone could increase. (according to European Harmonized Index of Consumer Prices (HICP) that will be released on Friday)
US Bond Yields spiked higher after the announcement of Trump’s trade restrictions. On the backdrop of more moderate trade policies, investors started to expect inflation could continue its downtrend, and this is inevitably leads to slowdown in T-note yields. But with the new tariffs speech, markets started to assess the degree to which such policies could be rigorously put in place.
The mote such policies are strict, the more inflationary Trump’s economic policies will be inflationary. Which leads to more gains in the sovereign bonds. ??????
US Stocks made gains buoyed by earnings and the announcement of a ceasefire ?between Lebanese Hizballah and Israel.
USDJPY followed the footsteps of US bond yields due to the positive correlation among them. ?Oil slumped due to ceasefire agreement?between Lebanese Hizballah and Israel.