A Republican clean sweep is the most bullish scenario for the
dollar medium term. Loose fiscal, tight monetary policy plus tariffs are all positive. Dollar strong, then stronger is our call. A risk-on theme, whether justified or not, will reduce the bid for bonds, pushing yields up. A gung-ho attitude to the ballooning fiscal deficit adds to issuance, pressuring rates high.
Stronger growth and higher inflation likely mean the Fed keeps interest highest in this scenario. Moreover, ongoing loose fiscal policy is likely to result in tighter monetary policy in general. - ING
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