Global financial markets have responded sharply to Donald Trump’s anticipated re-election as U.S. president.
Saxo’s head of commodity strategy, Ole Hansen commented: “This scenario is shaping up as a potential ‘Trump 2.0’ or ‘Red Sweep,’ with Republicans likely controlling both the White House and Congress. This would give them considerable influence over forthcoming tax and spending negotiations.
“So far, the results have pushed the dollar to a one-year high, with the Mexican peso, Japanese yen, and euro experiencing the biggest declines. The peso and yen, in particular, are affected by the likely divergence in rate paths between the FOMC and other major central banks.
“The U.S. yield curve has bear-steepened, with long-term yields rising faster than short-term ones, as concerns grow that Trump’s unfunded tax cuts and tariffs on imports could rekindle inflation fears, potentially slowing the pace and scope of future U.S. rate cuts.”
US government borrowing costs rise
In the debt market, U.S. government borrowing costs have spiked as Treasury yields reached four-month highs.
Yields on 10-year Treasury bonds—representing the return promised to buyers—rose to 4.47%, surpassing last week’s peak of 4.39%. Meanwhile, two-year yields increased to 4.31% from 4.19%, driven by expectations that Trump may introduce more inflationary policies.
Mark Haefele of UBS noted that the rise in yields reflects “anticipation of higher nominal GDP growth and larger fiscal deficits.”
In contrast, government borrowing costs in Europe fell, as investors turned to European bonds over concerns that Trump’s inflationary tariffs might slow economic growth. Yields on UK, German, and French bonds declined, further widening the gap between U.S. and European borrowing costs
Clean energy stocks plunge as Trump plans to halt offshore wind projects.
Shares in European clean energy companies fell sharply following Donald Trump’s victory in the U.S. presidential election.
Orsted, the world’s largest offshore wind developer, dropped 9.5%, while wind turbine manufacturers Vestas and Nordex declined by 8.7% and 3.4%, respectively.
Trump has pledged to cancel offshore wind projects via an executive order on his first day in office. The Republicans have secured control of at least one chamber of Congress and may control both.
Shares in German utility RWE, which holds wind assets, fell by 2.3%, and Portugal’s EDP Renovaveis dropped 6.8%.
