Markets are on hold ahead of US healthcare voting - ANZ
|Sharon Zollner, Senior Economist at ANZ, explains that the global financial markets seems to be on hold as US healthcare negotiations are ongoing, with voting delayed till 2-4pm EDT on Friday.
Key Quotes
“The success or otherwise of the bill is being seen by markets as a gauge of the sustainability of the Trump reflation trade.”
“The Trump reflation trade, based on optimism that Trump’s spend-up and tax plans will boost the US economy and inflation further, is facing a test today. The trade – particularly the equity leg of it, which has seen US equity indexes roar to record highs – has arguably been long on optimism and short on substance for some time now. Today’s vote on the bill to repeal and replace Obamacare seems to be being interpreted by the market as a touchstone for whether the thrust of Trump’s fiscal plans are going to be realised, and hence whether a continuation of the reflation trade is warranted. At the time of writing the fate of the bill is unclear.”
“The vote comes at a sensitive time for the market, with the initial post-election exuberance having waned and the market unsure of direction from here as it weighs up political uncertainty, a strong US economy, and an increasingly hawkish Federal Reserve. One thing does seem likelier than not, and that is that financial market volatility is set to rise from the extreme lethargy that has been seen in the past three months. That means potentially more action in equities, interest rates, and currencies, as analysts and market participants attempt to ascertain the real state of play. High correlations in recent times underline that any volatility is likely to be transferred directly into New Zealand assets.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.