Stephen Fisher is the principal of First Degree Global Asset Management based in Hong Kong and a YieldReport contributing writer. He writes about markets in a refreshingly forthright manner and in his latest missive looks at the Donald Trump phenomenon and what it means for global bond rates.
He contends that markets have anticipated “Trump-flation” and are in the process of pricing bonds accordingly. He is however sceptical that Trump will actually generate inflation and he thinks investors who have pushed bond yields higher since the election victory are largely of short term traders re-positioning their portfolios.
Stephen’s article was written before the US Fed raised interest rates at its December meeting but it still has valuable insight into inflation drivers and bond risk premia.
The ingenious man
Just like Cervante’s classic “The ingenious man Don Quixote of la Mancha”, Donald Trump will provide many enjoyable hours of entertainment as he tilts at the establishment windmill which is the US Government. Just like Don Quixote, Don Trump will find his windmill impossible to beat; it is an impossible dream.
But whereas Don Quixote led a self-important life with zero international recognition, Don Trump was already a household name before adding US President to his CV. His unorthodox campaign ingeniously rejected the interests of the powerful liberal-socialist Fourth Estate, making him the villain of the media, blamed for everything that is bad. Pollution, shootings, racial discontent, the breakdown in Chinese diplomatic relations and even price inflation.