What a week! It was supposed to be a tight race for the US elections, but Donald Trump crushed it. Ultimately, it was no contest, with Trump winning most swing states and registering a landslide win. The markets greeted this result with optimism, with the US Dollar and US equities rallying strongly. The Federal Reserve but 25bps as expected, with Powell’s commentary bringing no new information or direction.

The US Dollar was one-way traffic throughout the week, anticipating strong policies and deficit reduction from the President, with Elon Musk’s help – but will these hopes materialise? Last week, the DXY index rose by 0.6% to close at 104.951.

The Euro retreated last week as markets contemplate whether the upcoming Trump policies will be negative for Eurozone trade. The single currency fell over 1% against the USD, the GBP, the JPY, the AUD, and the NZD.

The British Pound had a forgettable week. The BoE cut the expected 25bps, and economic data did not surprise.

Commodity currencies finally stopped their five-week fall, even though one would have guessed that a Trump win would have been negative for them. Last week, the AUD, NZD, and CAD all rallied marginally, while the NOK gained 0.6% against the Dollar. Elsewhere in FX, the JPY posted a slight gain, and the CHF fell 0.7%.

Oil is still trading within the broad range, with weekly swings in both directions. Last week the WTI rallied 1.6% to close at $70.38.

Precious metals continued their correction after their strong move higher. The Trump election win theoretically is good for the geopolitical environment, but it’s negative for Gold. Last week, Gold fell 1.9% to close at $2,684, and Silver dropped 3.5% to $31.307.

Bonds finally stopped their recent fall, having reached attractive yield levels. It’s worth noting that positioning is once again very short, and this could pave the way for another powerful short squeeze; shorts should be very careful! Last week, the 10-year UST yield fell 7bps to 4.31%, and the 10-yearBund rallied 0.6% to close at 132.288.

Equities, particularly US indices, greeted the election win with great optimism. Last week, the S&P500 index broke the 6k barrier for the first time and closed 4.6% higher at 6002, while the DAX was broadly flat at 19215 points.

Finally, crypto-currencies shot higher as Donald Trump has been openly very crypto-friendly. He has suggested a strategic Bitcoin reserve, but is this optimism premature? Time will tell. For now, cryptos are registering substantial gains, and spirits are high. At the time of writing, Bitcoin was 10% higher at $76,500, and Ethereum was up over 20% at $3,030.

The Week Ahead:

The week ahead should continue broadly like last week, with optimism dominating market psychology. As the 6000 mark has been broken in the S&P500, the road to higher levels should likely be straightforward. Data-wise, we have US CPI this week, and it’s probably the biggest risk for markets in the coming days. We also have inflation readings from Germany, Norway, and Japan, as well as US Retail Sales and the Banxico interest rate decision.

Market Commentary: This communication is for informational purposes only. It is not intended as an offer or solicitation to purchase or sell any financial instrument. All market prices, data, and other information are not warranted as complete or accurate and are subject to change without notice. Any comments or statements made herein do not necessarily reflect those of Coeus Capital. Coeus Capital does not assume any liability whatsoever for the content of this newsletter or make any representations or warranties as to the accuracy and completeness of any information contained in this newsletter.