Monday, December 5, 2016

Global Macro on One Page for December - The Trump Effect?

Our Global Macro Themes on One Page suggests that the surprise Trump rally will continue to dissipate as we refocus on economic basics. Show me the economic numbers.  While growth expectations have increased for 2017, the last employment report shows continued economic strength but not something that suggests we are moving into a new growth regime. Numbers suggest a perhaps 2+ percent increase with inflation inching to the magic 2% target. On the monetary side, we are back to basics with a focus on the Fed and other central banks.

For any further “Trump rally” or “Trump bond sell-off” traders are going to ask for the details of what to expect in the first 100 days of the administration.  Political developments in Europe will contribute to market noise, but the announcement of the Fed action plan for 2017 is still the key market driver.

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