The US presidential inauguration of Donald Trump is near, and investors are eagerly awaiting the new administration’s policy initiatives. ED Yardeni, an economist, predicts a flurry of executive orders on deregulation, immigration, tax laws, and other policies that will impact the economy.
These measures will likely lead to increased uncertainty in the market, which has been reflected in rising 10-year yields close to 4.7%. However, Yardeni believes the economic outlook is “okay” for now, but with a caveat – it may not be as strong as expected due to these policy changes.
The bond vigilantes are taking notice of the Fed’s rate-cutting strategy, and Yardeni thinks they might be right in arguing that the economy doesn’t need more stimulus. The 100 basis point rate cut in September has put upward pressure on bond yields, which have risen by a similar amount since then.
Yardeni notes that the Fed may not be lowering interest rates soon, as officials are starting to indicate a pause in rate cuts. He believes this is due to concerns about inflation and potential changes in policy under the new administration.
Looking ahead to the Indian market, Yardeni attributes the recent uncertainty to a mix of factors, including dollar index strength and global political instability. However, he sees India’s prospects as relatively stable compared to other emerging markets.
The strong US dollar is expected to continue benefiting emerging economies like India, which makes it less likely for them to underperform. With the dollar’s upward trend, investors may be more cautious about their investments in Indian stocks, but Yardeni believes this won’t have a significant impact on India’s overall prospects.
Source: https://economictimes.indiatimes.com/markets/expert-view/trump-2-0-executive-orders-to-shape-us-economy-and-global-markets-ed-yardeni/articleshow/117105056.cms?from=mdr