Rates Spark: Trump's Government Is Now A Fact

2025-01-21 04:45:00 ET

Summary

• Markets may have “bought” the rumour and will proceed to “sell” the fact now that Trump's inauguration is a done deal. Even if UST yields come down, we still see structurally higher US rates.
• On his first day of his second term as US President, Trump declared energy and border security emergencies, but has not enacted tariffs - yet.
• EUR rates reacted with mild relief, but the ECB will still tread cautiously.

By Michiel Tukker and Benjamin Schroeder

Markets may "sell" the fact, but we still see structurally higher US rates

With US President Donald Trump officially back in office, the question is whether markets bought the rumours but will sell the facts. The month leading up to Trump’s election in November also saw a significant rally in UST yields, but that move faded in the weeks thereafter. Similarly, rates have risen steeply over the past month as we approached inauguration day. Trump has made his ambitions for radical changes immediately into his presidency clear, but whether those plans can materialise is still more uncertain....

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