Waiting for Trump to Address Congress

Waiting for Trump to Address Congress.

One could think that markets would remain steady until Trump speaks to Congress, however, one would be wrong. The equity market stalled early today, and as the day wore on equities rallied. Some of the rally can be attributed to continuing solid results from corporate U.S. and excitement building ahead of Trump’s Congressional Address on February 28. The Fed minutes showed the majority of the Fed Board believed that rates were due to go up and could happen in March. The Minutes also pointed to the belief by the Fed that they could raise rates without slowing the economy.

Trump is expected to discuss how he will dismantle Obama Care and his Phenomenal Tax Cut. The excitement is building and it’s this optimism that has the Dow at all-time highs, its ninth record and the best streak for some 30 years. Trump has announced that he will have his Budget ready by March 19 and this could be problematic as Congress may have to go into partial shutdown if the Budget is not passed by late April.

Against this optimism the bond market is showing some interesting behavior. Bond investors are concerned about Le Pen and her prospects in the French election. What we had in Europe appears to be a flight to safety and I think that this is also driving the U.S. bond market. Bunds rallied with the 10 year bund about 0.22% the 2 year Bund ran to a record low of -0.915%. The U.S. Treasuries closed around 2.41% after seeing a high of 2.44%.

The U.S. dollar was slightly stronger. Commodities were mixed with copper gold and oil falling. WTI is now trading around $53.50.

Aussie Market Today.

The US rally continues and that is good for equities. Aussie equities should be stronger on the day. Bonds will be steady with a possible slight fall as I expect the bonds to be quiet on the day. Iron ore was stronger overnight and that bodes well for both the currency and equities. Iron ore was up 0.2%.