During his first term as president, Donald Trump policies to revitalize the U.S. economy were by deregulation, reducing corporate/individual tax and reducing trade deficits among other things, often using the S&P 500 as a benchmark for success. A stronger economy attracts more investments, creating a positive feedback loop that further strengthens the economy and the U.S. dollar.
However, Trump frequently resorted to verbal interventions to curb the strength of the dollar, often aiming to maintain trade competitiveness. Tariffs were another tool used to address trade imbalances and reduce the deficit with other nations.
In his current term, the economic landscape is more complex, with inflation posing a significant challenge. Excessive tariffs now carry the risk of exacerbating inflation, which remains a critical issue. Inflation volatility could bring heightened fluctuations to the U.S. dollar and bond yields, making the market more unpredictable. Traders should prepare for sharp movements and potential “whiplash” resulting from new tariffs or verbal market interventions.
To combat inflation, Trump is prioritizing increased oil production as a strategy to curb core CPI inflation. As these measures unfold, their impact on the economy will become clearer, but the path for the U.S. dollar and bond yields will likely remain turbulent.
One constant is Trump’s focus on driving up the S&P 500, as he did during his first term. Over the next four years, sustained efforts to bolster the stock market could present valuable opportunities for traders. Swing and position traders, in particular, may benefit by buying dips and selling at higher levels.
The U.S. labour market remains robust, showing no signs of weakening. This strength has fostered optimism, providing a solid foundation for continued growth in the S&P 500. However, the trajectory of U.S. yields and the dollar over the next four years remains uncertain, requiring cautious trading strategies. Recent fluctuations in EUR/USD and other currency pairs around the inauguration highlight the unpredictable nature of the current economic environment.
Disclaimer:
Trading in stocks, currencies, CFDs (Contracts for Difference), Forex, spread betting, futures, cryptocurrencies, and related financial instruments (“Trading”) involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results, and you should be aware that trading can result in substantial losses. It is essential to carefully evaluate your financial circumstances and, if necessary, consult a qualified financial advisor to determine whether trading aligns with your financial goals and risk tolerance.
Be aware that certain trading strategies, such as contingent orders (e.g., “stop-loss” or “stop-limit” orders), do not guarantee limited losses. Market conditions may render these strategies ineffective, potentially leading to losses that exceed intended limits. We also emphasize the risks and opportunities associated with leverage in trading. While leverage can amplify gains, it can equally magnify losses, resulting in significant financial impact.
Important Notice:
The content on marketsandglobaltrends.com is provided for entertainment and informational purposes only and does not constitute professional investment advice. It should not be relied upon as a substitute for consulting a licensed financial advisor.
marketsandglobaltrends.com assumes no responsibility for financial losses, damages, or other consequences arising from trading activities. Claims for damages cannot be made against the site. Additionally, trading may have an addictive potential. If you believe you are at risk, we strongly encourage you to seek professional help.