Cooling down

During the month of December, the “Trump-jump” observed following the November 8 election cooled down. The charts for Bonds, Stocks, Inflation Expectations and the Dollar illustrate. Those moves are consistent with expectations of higher growth and somewhat higher inflation, brought about by market participants focusing on talks of supply-side reforms (deregulation) and increases in government spending (infrastructure). As the weeks progressed and cabinet appointments announced, the “negative side” of possible Trump changes, things like protectionism and China-bashing, invited a pause. There was also the “Fed factor”, sending a slightly more hawkish message following the December 14 FOMC Meeting. Note in…

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