Foundering Trump Trades Put Wall Street Risk Fixation to Test
- Two-way volatility rises in markets amid murky policy outlook
- Listless asset moves creating headache for trend followers
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It was the layup trade for the cross-asset crowd back in December. With Donald Trump promising to rev the economy to capacity, they loaded up on stocks, sold government bonds and went long the dollar to ride a rising American tide.
Now, a little over a month later, those best-laid plans are taking lumps. US stocks are up, but the S&P 500 is a surprise laggard compared with international equities. After an initial spike, yields on 10-year Treasuries have pulled back, sitting below 4.5%. The dollar has weakened against a basket of major currencies to its worst start to a year since 2018.