US stocks rise again with hopes a dominant Trump Presidency will be good for growth and profits, but Treasury yields fell ahead of the Fed’s decision. The Bank of England cuts, but looser British fiscal policy may slow more cuts.
In our bonus Deep Dive interview, ANZ Economist Vicky Xiao Zhou explains how well China is prepared for Trump tariffs 2.0.
5 things to know:
US stocks kept rising overnight and bond yields retraced some of their immediate jump in the wake of Donald Trump’s sweeping victory in US elections. ANZ’s Head of G3 Economics Brian Martin says markets are more sceptical Trump will be able to get inflationary tariffs and borrowing past a hawkish Republican Senate.
The Bank of England cut its cash rate overnight by 25 basis points to 4.75% and said disinflation had happened a bit faster than it had forecast in August. However, the new Labour Government’s new Budget has added some stimulation to the economic outlook over the last week, says Brian.
The Fed is expected to cut the Fed Funds Rate by 25 basis points to a range of 4.5% to 4.75% right on our publication time of 6am Sydney/Melbourne time. Brian says there are growing expectations the Fed will cut another 25 basis points next month as the US labour market moderates.
Australia’s trade surplus fell nearly $700 million in September to $4.6 billion as exports fell 4.3%, ahead of imports which were down 3.1%. ANZ Economist Sophia Angala says exports to all of Australia’s major trading partners dropped, except to China.
China’s exports rose 12.7% year on year in October - the fastest rate in two years, while imports undershot estimates, falling 2.3%. ANZ Economist Vicky Xiao Zhou says factories boosted output ahead of the US election in anticipation of new tariffs.
Cheers
Bernard
PS: Catch you next week with analysis of the Federal Reserve’s rate decision, being announced as we go to print this morning.
