Trump Wins, But The Market Reaction Is Not What It Seems
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The most important transmission mechanism of a Trump presidency on the stock market will be via its impact on the US-Japan real yield differential. This is because Japan’s extreme negative real yield versus the US is the dominant source of global liquidity right now, and thereby the main driver of stock market valuation. In the short term therefore, higher US bond yields mean higher stock prices. The longer-term implications are more concerning though.
BCA Research | CoreMacro
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