Monday, January 23, 2017

US Stocks Slip, Treasuries Rally as Trump Talks Trade
by Mamta Badkar
Financial Times

US stocks lost their vim once again and Treasuries rallied on Monday as President Donald Trump showed that trade protectionism would be the heart of his policy.

The S&P 500 finished the day 0.3 per cent lower at 2,265.38, the Dow Jones Industrial Average declined 0.1 per cent to 19,801.63. The Nasdaq Composite meanwhile was little changed at 5,552.95.

The move came as Mr Trump pulled the US out of the Trans Pacific Partnership (TPP), which has been a crucial initiative under former President Barack Obama’s pivot to Asia. Over the weekend Mr Trump signalled that he would seek to renegotiate the North American Free Trade Agreement. He has also threatened to punish American companies for moving production overseas.

The yield on the US 10-year Treasury note ended the day 6.4 basis points lower at 2.403 per cent. Treasuries had taken a hit in the weeks after Mr Trump was elected in November on expectations that his stimulus measures would stoke inflation. But that trade appears to have lost steam as investors continue to wait on more details about his stimulus measures.

“While hedging activity has slowed down last week, after President Trump’s inauguration just last Friday, the risk of a larger pullback this week remains with market volatility potentially on the horizon for traders,” said Randy Fredrick at Charles Schwab.

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