Too Early for ‘Inflation Bets’?

The Trump Trade
After 35 years of waiting… so many false signals… so often deceived… so often disappointed… bond bears gathered on rooftops as though awaiting the Second Coming. Many times, investors have said to themselves, ‘This is it! This is the end of the Great Bull Market in Bonds!’
And then, at the appointed hour, expecting the rapture… they took the leap of faith only to come crashing down on the rocks below. In 2008, in 2012, in 2014 – Each time, the market made fools of them.
Now, weary, wary and nearly broke, they make their bets as though they were setting an explosive charge at a federal building. ‘Bond rout accelerates as Trump stimulus vow spurs inflation bets’, reports the Financial Times.
More than $1 trillion has been clipped from global bond values in the last week. Meanwhile, the Dow continues to move up, closing in on 19,000 and a new all-time high. This is the ‘Trump trade’ – the bet that the incoming administration will be good for stock prices and bad for bonds.
It will be good for stocks, they believe, because ‘The Donald’ proposes to lower corporate taxes, remove regulation that stifles certain sectors, and reward other sectors – infrastructure and the military – with more money.

This post was published at Acting-Man on November 22, 2016.