US Elections: Looking Into A Trump Victory


AXA IM | Markets have reacted to his trade policy proposals, but implications are more far-reaching. A key macroeconomic difference between Clinton and Trump victories is the short-term cyclical outlook, with a more forceful fiscal stimulus under a Trump presidency. This would imply Clinton win (baseline) stronger GDP growth, steeper Fed tightening, a stronger dollar and higher US treasury yields.

The “full Donald” scenario would lead to a more negative scenario in 2018 – 2019, however . It would change the economic policy framework in the US, including possibly a more rule – based Fed and more protectionist trade policy . The latter may in turn cause retaliations in some parts of the world, China in particular, and derail the global recovery .

Historically however, US presidential elections have typically had a limited impact on financial markets. In our baseline case of a Clinton victory, such historical experience should prevail.

Ahead of the election so far, markets have reacted to Trump’s trade policy proposals (which we emphasised in our “full Donald” scenario , in particular through the Mexican peso, the Canadian dollar and to a lesser extent Asian currencies .

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.