Chart in Focus: Is the “Trump trade” real?

Multiple authors
3 min read
2025-11-29
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Helicopter view of the New York City skyline and the The Trump Building in Lower Manhattan, New York.

The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.

The market’s initial reaction to Trump’s reelection was generally one of exuberance domestically, with US equities surging while global peers generally foundered. Following his 2016 election, the initial response was more muted as the world digested the news of what had once been a dark horse candidate, but markets eventually rallied in the months ahead.

Commodities have suffered as the prospect of higher rates and a strong dollar has made gold less attractive, while copper and oil movements are a reaction to a potential China trade war/less green energy support and expansion of oil supply. US equities bumped on potential tailwinds like corporate tax policy while fixed income has paused in the face of higher rates.

Market moves so far are based on Trump’s proposed campaign policies and his first term; while Trump will see his margin of victory as a mandate to implement these policies and the implications should not be discounted, they are not yet tied to concrete action or fundamentals.

Figure 1

Could ex-US equities begin to outperform US equities?

Investment implications

  • The election conclusion has put an end to speculation based on the two candidates and their wide range of respective policy outcomes. Market volatility associated with uncertainty can ease and the market can narrow its focus on policies instead of possibilities. In the short term, positive tailwinds that stood to potentially benefit risk assets prior to the election are still in place and should be buoyed by renewed optimism for corporate tax cuts.
  • The Fed seemingly had tempered inflation and was navigating a soft landing prior to the election; Trump’s victory brings the possibility of higher inflation and could lead to a slower Fed rate-cutting trajectory. Developed rate markets have already begun to price in the news, but similar to moves in other asset classes, may be premature should policies not materialize in the short term.
  • Investors should closely follow ongoing events but beware the temptation to chase the market before the dust settles given market overreactions may occur. Maintaining a nimble, diversified portfolio that is able to capitalize on short-term dislocations is the true north.

What we are watching

  • Political appointments that may signal policy outlook in both foreign and domestic affairs; appointments thus far are perceived as hawkish on subjects like immigration and China.
  • Don’t take your eyes off the Fed; continue to monitor progression on the soft landing via signals like inflation, employment, and GDP data. Longer term, the counterbalancing impact of deregulation measures versus tariffs on the economy and inflation.
  • Within geopolitics, Trump has affirmed his desire to exert pressure and end global conflicts in Ukraine and the Middle East while increasing usage of economic tools (tariffs, sanctions) to address conflicts in trade. 

 

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