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Markets continue to respond to Trump and his first failure in Congress


Markets are reeling this morning in the wake of the failure for Donald Trump to push his healthcare legislation through Congress. On the surface this does not seem to be a big deal, however it is the implications that this has for Trump’s presidency that the market is concerned about. We look at how traders are reacting and how this is impacting on forex, equities, and commodities markets going forward.

dollar falling

If the failed healthcare bill tells us anything, it is that Donald Trump will not get an easy ride as US President. Rolling back President Obama’s flagship Affordable Care Act has been an aim of the Republicans for years and is Trump’s first significant legislative move and the market has been taking the progress as a lead indicator for how successful Trump may be in pushing through his proposed fiscal plans. If Trump cannot push through changes to Obamacare, which has long been the bugbear for Republicans, the fear is that Trump will be unable to achieve a fiscal expansion that would significantly increase the national debt. Legislation that increases debt has traditionally been viewed with significant scepticism by most Republicans. US Treasury Secretary Steve Mnuchin has already laid the groundwork for a battle after labelling the debt ceiling as a “ridiculous concept”, but quite whether his party will go with him remains to be seen. The failure to pass Trump’s healthcare bill reveals the slog and potential deadlock yet to come. This became an issue for markets last week, and is now driving an unwinding of the “Trump-trade”. Safe haven assets have been outperforming, with Treasury yields beginning to earnestly unwind the sharp gains since November. With a reduction in risk appetite, this has also driven gold and the yen higher, whilst equities are also now threatening a deeper correction.

 


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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.