In the United States, he won the presidential election Donald Trump’s according to estimates, the policy is more inflationary than the competitor. The interest rates on US government bonds rose clearly and already in anticipation. However, the central bank Fed continued to lower policy rates, and government bond rates reacted in the same direction. In Europe, the tariff threat weakened the economic outlook and, in the opposite order compared to the United States, interest rates first fell and corrected upwards.
It takes time for investors to clarify their views on the future policy and its effects on the capital market and see fluctuations in the market. The change in views can be seen most clearly in the interest and currency markets.
From the point of view of Finnish households, it is special that the deteriorating European economic outlook pushed expectations of the future development of the Euribor lower than before.
After the 2016 election, Trump’s tax cuts had a strong economic recovery effect and had an impact on the markets in the first years of his presidency.
The economic picture will remain somewhat more uncertain than normal, at least until the change of power takes place in January 2025. In the United States, citizens do not like inflation, and this may eventually affect the implemented policies as well. Especially from a European point of view, the economic picture is also affected by possible changes in the foreign policy of the United States.
Investors were expecting policies that increase debt from both candidates in the US presidential election. This explains, at least in part, why interest rates on government bonds rose sharply even before the US election day. Clearly, the market also seemed to have predicted the election of Trump, even though the predictions based on the polls seemed very even.
Source: www.arvopaperi.fi
