Doug Noland: Trump, Bonds, Peripheries, China and Italy

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
The trading week saw WTI crude surge 12.2%. The GSCI commodities index jumped 5.8%. Wheat dropped 3.6% and corn fell 3.1%. Italian 10-year yields fell 18 bps, and Greek yields dropped 37 bps. Meanwhile, Portuguese yields jumped 13 bps. In U. S. equities, Bank stocks (BKX) jumped 1.5%, while the Morgan Stanley High Tech index dropped 3.4%. The Biotechs (BTK) sank 6.4%. The DJIA was little changed, while the small caps fell 2.4%. Just another week for unstable global markets.
Pre-election trepidation morphed into post-election market exuberance, in only the latest demonstration of the power of an over-liquefied market backdrop. Here in the U. S., the bullish imagination has been captivated by the Trump administration’s pro-growth agenda, with a focus on tax and health-care reform, deregulation and infrastructure spending. The DJIA this week added slightly to record highs.
Meanwhile, a decidedly less halcyon reality seems to be coming into somewhat clearer focus: Trump’s victory likely marks a major inflection point for global markets. Bond yields have shot higher, while inflation expectations are being reset. The U. S. dollar has surged, while the emerging markets have come under pressure. From U. S. equity and bond ETFs to international financial flows, ‘money’ is sloshing about chaotically.

This post was published at Examiner by Doug Noland ‘ December 3, 2016.