US: Trump effect continues to reverberate - Rabobank

According to Bas van Geffen, Quantitative Analyst at Rabobank, the Trump effect continues to reverberate through the United States as consumer confidence, as measured by the Conference Board, was off the charts.

Key Quotes

“March confidence came in at 125.5, much stronger than the expected 114, and well above the February estimate of 114.8 – which was revised up as well! Households surveyed expressed broad optimism. Especially their outlook for the labour market and business conditions was positive.”

“However, the fact that Trump’s administration had to pull the health bill for lack of support from Congress could also spell trouble for the implementation of Trump’s other proposals. Signals that Trump will be unable to win over Congress for his other plans, such as tax proposals and initiatives intended to further boost the job market, could hit this post-Trump optimism in the US economy.”

“For now, bets are still on Trump succeeding. The Fed’s Fischer stated yesterday that two more rate hikes this year seem “about right”. Though Mr. Fischer added that they are watching the developments on Capitol Hill closely, he currently sees no big changes in the FOMC’s outlook. US rates rose, with 10y Treasury yields touching 2.42%. Fisher’s remarks also lent support to the US dollar, which appreciated sharply in US trading. EUR/USD declined from the 1.086-level around which it traded for most of yesterday to just under 1.08 at the time of writing.”