Yield hunting isn’t over with Trump, it’s just gotten more selective

SINGAPORE (Nov 18): When Donald Trump won the presidential elections, it sent US Treasury 10 year bond yields higher at 2.2% from 1.8% before the election, due in part to the possibility of more expansionary fiscal policies.

“The fundamental outlook for 10-year US Treasury yield does suggest that there is room for yields to rise but the pace at which it increased post-elections looks excessive,” explained James Cheo, Bank of Singapore’s investment strategist, who added that term premiums which have been negative since the start of 2016, are likely to turn positive.

In a note on Thursday, Cheo pointed out that the policies from a Trump administration had two extremes. “On the one hand, we have the fiscal thrust and deregulation which is generally good for markets, and on the other hand, there is the anti-trade stance which is clearly bad for risk assets.”

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