US equities gave back a portion of the previous week’s gains, as uncertainty over the incoming administration’s policies appeared to continue driving the so-called Trump Trade. Financials and energy shares continue to benefit from hopes for deregulation and merger approvals. Likewise, the price of Bitcoin had surged by nearly a third since the eve of the election, as investors anticipated looser regulation of digital currencies. Conversely, health care shares fell sharply following news that Robert F. Kennedy, Jr., would be Trump’s nominee to head the Health and Human Services Department (HHS). On the macro side, yoy US headline inflation rose for the 1st time since March, from 2.4% to 2.6%. PPI data came in above expectations. Speaking Thursday, Fed Chair Jerome Powell seemed to dampen sentiment a bit by remarking that “the economy is not sending any signals that we need to be in a hurry to lower rates.” Expectations for a full percentage point of cuts by the end of 2025 fell from 41% to 32%. Expectations for higher long-term interest rates were also reflected in a sharp rise in the yield of the 10-year U.S. Treasury note, which touched its highest intraday level (4.51%) on Friday since the start of June. The pan-European STOXX Europe 600 Index ended 0.69% lower, falling for a 4th consecutive week. Chinese equities declined 3.5%. The dollar rallied for the 7th straight week to its highest since November 2022. Gold suffered its worst week since June 2021, falling back to two-month lows.
Have a great week-end
Charles for the team