A look at the day ahead in European and global markets from Rae Wee Market movement over the past week or so since Donald Trump won the U.S. presidential election has been marked by a significant rally in bitcoin, rising Treasury yields, and a strong U.S. dollar.
Thursday continued this trend. Despite traders now anticipating an over 80% chance of a Federal Reserve interest rate cut next month following Wednesday’s inflation report, the dollar actually climbed to a one-year high, buoyed by the positive momentum from Trump’s victory.
The President-elect’s commitment to tax cuts could stimulate the economy, increase budget deficits, and lead to higher government borrowing, which has already contributed to rising long-term Treasury yields.
His proposal for significant import tariffs is also anticipated to drive inflation up and limit the Federal Reserve’s ability to ease monetary policy.
With expectations that the Republican Party will control both chambers of Congress when Trump assumes office in January, he is poised to have considerable power to advance his agenda.
In Europe, markets will be looking forward to the release of the euro zone’s second estimate for GDP growth and the third-quarter flash employment data.
Preliminary figures from October indicated that the bloc’s economy grew at a faster pace than analysts had predicted in the third quarter compared to the previous three months, although it remains fragile, with the industrial sector in recession and household consumption showing minimal growth.
Later in the day, Fed Chair Jerome Powell will address an audience in Dallas after reviewing the U.S. October producer prices report, which will be released shortly before his speech.
The PPI figures are closely tied to the Fed’s preferred inflation measure, the personal consumption expenditures price index, which will be published later this month.
However, Powell’s comments about 2025 and beyond will be limited, as much will depend on Trump’s actions once he takes office.
Trump has already made a series of appointments for his cabinet and other senior administration roles, covering areas such as defense, intelligence, diplomacy, trade, immigration, and economic policy.
Key developments that could impact markets on Thursday include: –
Second estimate of Q3 euro zone GDP
– Euro zone Q3 flash employment
– U.S. weekly jobless claims
– U.S. October PPI
– Fed’s Powell speaks
