By Benjamin Picton, Senior Macro Strategist at Rabobank
US markets have been in risk-on mode since early votes for Miami-Dade County (usually a Democrat stronghold) in Florida hinted that US voters would be sending Donald Trump back to the White House. The S&P500 had its best week of a very good year last week to close 4.66% higher than the previous Friday. A well-telegraphed 25bps Fed rate cut helped the rally to last into the weekend, with assists from the BOE and Rijksbank who both cut their own policy rates.
The extra liquidity from the Fed cut probably helped Bitcoin to crack the $80k barrier over the weekend. That’s up $10k/coin in the space of one week as crypto bros anticipate a more friendly regulatory attitude emanating from the White House once Trump is inaugurated early next year. RaboResearch is expecting a 25bp cut in December and another in January. After that we think the Fed will be on hold as Trump hits the ground running with executive orders on tariffs and deportations, and legislation to cut taxes that will be a strong chance of passing through Congress now that the Republicans appear to be on track to secure majorities in both houses. The margin in the…
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