With Donald Trump back in the White House, all eyes are currently on the United States of America. How radical will the new US president be, and what will 2025 bring for US equities and bonds?
“The one thing that I am certain about is that the US economy is set fair, delivering the goldilocks scenario of disinflation without a significant recession or fall in employment,” says Steven Bell, Chief Economist EMEA at Columbia Threadneedle Investments.
Bell cautions that the bond vigilantes threaten the equity market, but their real target was the US deficit. “I think that the new administration’s desire to keep the economy and stock market buoyant will allow the bond vigilantes to act as a constraint on Trump’s radical agenda, or at least those parts with a significant fiscal cost.” That leaves us overweight on US equities, with a positive economic backdrop, falling interest rates and deregulation, even if there’s a lot priced in,” he adds.
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