The people of the United States have spoken! With both Trump’s Republican party and the Democrats claiming victory over the mid-term elections in the public eye, markets have been more decisive in the face of the ballot. The Republicans held control of the Senate, however, ceded power of the House of Representatives to the Democrats. Markets have interpreted the mid-term elections by undermining the value of the US Dollar, likely pricing in the increased degree of political gridlock that the United States will face in pursuing economic growth. For months, economists and strategists alike have been debating when will economic growth in the United States peak. Given Trump’s pro-market and pro-growth presidency, political headwinds prevent fiscally driven economic growth, increasing the impetus for Powell’s Federal Reserve to pause its interest rate hiking phase. Positively, with the House being controlled by the Democrats, Trump’s capacity to increase the United States’ extant burden of debt does limit the extent to which the White House could drift into fiscal profligacy. Italy’s spending plan remains in the foreground of the picture of Eurozone risk with signs of inflationary pressure in the Eurozone being overwhelmed by political instability. The Pound received a sustained yet light bid at market open as investors continue to orientate themselves towards a long-awaited Brexit deal.
Discussion and Analysis by Charles Porter
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UK House Prices Unsurprisingly given the 12 interest rate rises and cost of living squeeze in the UK, the housing market has seen its largest year on year fall since 2009 when everyone was suffering from the global financial crisis. In the year to April the UK housing market has dropped by 3.4% with the […]
Opportunity for a weaker Dollar The passing of month-end allows markets an opportunity to reassess currency valuations. Despite a cooling off within the Dollar as forecasted following the agreement between the White House and Kevin McCarthy, month end flows yesterday showed favourable conditions for a short-term Dollar resurgence. The beginning of June coincided with headlines […]
Turkish Lira While President Erdogan removed the uncertainty overhanging the Turkish market by winning the election in the run off over the weekend, the news served to cement the certainty that nothing much was likely to change with respect to Turkish economic policy or indeed the subservient role of the Central Bank of Turkey to […]