(Bloomberg) — US equity futures maintained their post-Election gains and the dollar eased as traders continued to map out Donald Trump’s return to the White House and what it holds for the Federal Reserve’s interest-rate path.
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S&P 500 contract futures edged higher after the US benchmark surged on bets that the newly elected President will boost Corporate America through pro-growth policies. The dollar retreated 0.3% following its best day since 2022. Treasury yields eased after spiking across the curve on Wednesday.
Markets are taking a breather Thursday after grappling with the far-reaching effects of a Trump presidency. His win has forced investors to come to terms with economic policies to could lead to fewer rate cuts from the Federal Reserve, along with a possible Republican sweep that could lead to fiscal expansion.
“What we saw yesterday was the playbook of the Trump trade in action but it’s soon going to evolve,” said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris. “US yields can’t continue to go up with US equities on the rise, my conviction is that yields will calm down.”
Later today, Fed Chair Jerome Powell will face a tough test as a second Trump term sparks concerns over inflation and market volatility. Officials are expected to lower rates by 25 basis points, a move that will come on the heels of the half-point cut in September.
“What investors really want to know is: How will President-elect Donald Trump’s proposed fiscal and tariff policies affect the FOMC’s rates outlook,” Bloomberg economist Anna Wong wrote in a research note. “FOMC participants are probably wrestling with that very question.”
In Asia, Chinese stocks were among the best performers on optimism Beijing will roll out more stimulus measures and on encouraging export data. The yen strengthened after Japan’s chief currency official Atsushi Mimura said the authorities would take appropriate action against excessive currency moves.
Bitcoin, boosted by Trump’s embrace of digital assets during his campaign, slipped 1.1% Thursday after rising to a record high the day before. Oil steadied after a roller-coaster session on Wednesday as traders weighed the likely impact of Trump’s election victory on the crude market.
Key events this week:
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China trade, forex reserves, Thursday
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UK BOE rate decision, Thursday
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Fed rate decision, Thursday
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US University of Michigan consumer sentiment, Friday
