A lot of people have said the election is a game changer. In FX things have shifted dramatically - what drives currencies, (we used to think in cyclical and structural terms) is now politics. In other words, politics is the new economics. In a post- Trump and post-Brexit world, politics is now what dominates FX.
Globally, QE has had a desensitizing effect on bond and equity markets such that markets are less reactive to political developments. However, the low to negative yield world we live in remains driven more by political factors than anything else now that we've had a break from the status quo. Views and forecasts are now more affected by uncertainty and volatility and the political pendulum will swing more rapidly than the economic one.
With a new administration come new fiscal challenges to the outlook. Consensus from the new administration (from plans which have been published… Read More …