From Investing.com: 2024-11-20 02:06:02

Investors are scrambling to predict the 2025 investment outlook after Trump’s election win. Expectations of corporate tax cuts, tariff hikes, and inflation are driving market movements. However, the success of these trades relies on accurate predictions of Trump’s policies and their economic impact. Unforeseen consequences could unravel the entire Trump trade scenario.

One key element of the Trump trade is the expectation of rising Treasury yields due to potential tax cuts. However, overlooked spending cuts could counteract these effects and lead to lower inflation and bond yields. The mass layoffs of federal workers could further complicate the labor market and confidence levels. These uncertainties could disrupt other trades, such as the assumption of a stronger dollar.

Forecasters are facing a difficult task predicting market movements for 2025, with Wall Street banks projecting modest gains in U.S. stock indexes. The potential for a negative global supply shock due to trade restrictions and deportations could have severe consequences for the world economy. The risk of a large negative shock to business sentiment poses a major threat to global expansion. The Trump trade may not unfold as expected, adding further complexity to market predictions.



Read more at Investing.com: Column-There may be no durable Trump trade: Mike Dolan By Reuters