Markets generally dislike uncertainty, so on the one hand traders were pleased the US presidential race turned out to be a more one-sided affair than the polls had predicted.

On the other hand, while equities hit new highs on Trump’s reputation for backing ‘growth’ and doing away with regulation, treasury prices fell and yields continued to rise as forecasts for deficit spending and inflation increased.

There was also some consternation regarding the path of interest rates and the potential clash of personalities between the incoming president and Federal Reserve chair Jerome Powell.

While interest rates were cut last week, as widely expected, the Fed set a cautious tone ‘as policymakers navigate a complex landscape under the upcoming Trump administration’, as Principal Asset Management’s chief global strategist Seema Shah tactfully put it.

Meanwhile, Trump’s public attacks on the Federal Reserve chair, a lawyer by training, are well-documented, as is his dislike of the Fed’s decades-long independence in setting monetary policy.

Asked if he would step down before the end of his term in May 2026 if asked to, Powell outright refused, but if Michael Barr, vice chair for supervision, were to step down rather than stay in his post until 2026, it could allow Trump to influence regulatory policy relatively quickly once he returns to office.

As the focus turns away from politics and back towards the macro economy, the highlights over the next week will be UK and Eurozone third-quarter growth figures and core consumer prices, while in the US eyes will be on the fourth-quarter Atlanta GDPNow survey as well as retail sales as investors try to gauge how the election may have impacted consumer sentiment. 

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