Author: NN Investment Partners
The two main market trends since the summer are the rise in government bond yields and the rotation from defensive, yield-providing stocks towards cyclical sectors. We believe that the case for this reflation trade has further strengthened with the election of Donald Trump.
The market reaction to the election of Donald Trump as the next US president has generally been fairly muted. Some remarkable moves are visible though. Emerging markets seem to be the main victim, while the sharp rise in bond yields benefits financials and other cyclical sectors. This strengthens the reflation trade.