Pricing for Trump. But is it rational?
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Why are markets reacting to a lack of news and focusing on Trump’s second term?
What happens when there's not much news? Well, markets start thinking more about Donald Trump, seemingly. So Monday saw a stronger US dollar, higher mid-caps, another jolt forward for Tesla and Bitcoin. But is all this rational? Just how much money is going to be flowing into America under a Trump presidency? Will companies really just grow and grow? What if other countries don't take tariffs lying down and we end up with a massive trade war? Is it all a bit too much, too quickly? What numbers do we get today as well? The NAB Business Survey in amongst them. It's Tuesday, the twelfth of November twenty twenty four. It's the morning call from NAB. Good morning. Well today again we witnessed the continued rise in the US dollar this morning hitting a hundred and five point seven on the DXY.
Uh that is up another naught point six percent right now. The euro is down naught point six percent, the pound down naught point four percent, the Aussie just naught point two percent lower at sixty five point seven US cents, the Kiwi dollar only naught point one percent down, uh the US dollar up over five percent this month. So collectively all others in that Basket that makes up uh the DXY. All the others must have lost out by the same amount. That's the way it works, isn't it? US equities made modest gains at the close. The Dow is up naught point seven percent, not point one percent for the SP, which has broken through six thousand again, and the Nasdaq just in the green, having been in the red for most of the session, but finishing at a record high at this session.
And the Russell 2000 also uh just one point away from hitting a record high, but still hit the record. Its highest level since 2021 and closing up 1.5% today. In Europe it's mainly a sea of green as well, at 1.1% for the Eurosticks 50, Eurostox 50, I should say, 1.2% for the DAX, 0.7% for the FTSE 100, bond markets closed in the US for uh Veterans Day, but 10-year bundles in Germany down four basis points, same in France, down six in Italy. On futures, Aussie ten years are up a couple of basis points to four point five nine percent, and oil noticeably lower in this session. We've got a three point one percent drop in WTI down two point six percent for Brent, which is now worth seventy-two a barrel, big falls in gold as well, which has lost two point three percent, almost down six percent since its peak at the end of last month.
So Nabs Rodrigo Catrill is with me today on what's been a cost of Quiet session with the US on holiday, bond markets there closed, share markets still open though. So difficult to read too much on a day like today, but I guess the strengthening US dollar.
How is the strengthening US dollar affecting other currencies and global markets today?
I mean if we expect investment in a in a trombia to flow in, equity's up for mid stocks if we expect less regulation. Uh oil down, maybe that's because there's going to be more US domestic production, perhaps. Um But is this all more Trump trade? Yeah, Bitcoin, absolutely. And then um Tesla shares also continue continuing up. So is I mean the g I guess the question for all of this is so it's obviously all Trump related. The question is how much of this is rational?
Yeah, so well we've early at early days in terms of the the Trump presidency. He's just only been elected and and he hasn't kicked in in terms of taking the taking charge. So um and markets can remain irrational for an extended period of time. So uh in from from that perspective I think that there's there's room f to to go further. Even for so for instance you look at the dollar, um and um uh Speculative position is long, but it's not excessively long. So from that perspective, there's room for it to go higher. You look at ten year treasure yields at four well, if you add the four basis points that have been added overnight, it's around four thirty four. Um and yet, you know, getting to four fifty is is not unreasonable.
Um in fact that the big debate I would say is whether they can break above four fifty and then head higher from there. So Um in terms of room for for equity markets or risk assets to extend from current levels, I I think there's plenty of room.
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Chapters
8 chapters
1
Why are markets reacting to a lack of news and focusing on Trump’s second term?
0:02–2:26
2
How is the strengthening US dollar affecting other currencies and global markets today?
2:26–4:46
3
What does NAB’s new FX forecast assume about Trump’s tariff policy and its impact on the Aussie dollar?
4:46–7:40
4
How likely are the proposed 60 % China tariffs and what could they mean for global trade?
7:40–10:38
5
What are the implications of the latest NAB Business Survey for Australian business confidence?
10:38–13:11
6
How might US‑UK political dynamics influence future trade deals and market sentiment?
13:11–15:02
7
What does the upcoming UK employment and earnings data suggest for the Bank of England’s policy path?
15:02–16:50
8
When will the next NAB forecast update be released and what key assumptions will it test?
16:50–18:20