Trump victory: Risk-on rally represents the unwinding of pain trades - Tip TV

Nov 11, 2016, 02:09 PM

Trump victory and the resulting risk-on action across the board has caught most of us by surprise. Hence, in the opening segment, we dig deep in the financial market action seen post Trump victory and the conclusion is the risk-on rally is more due to unwinding of the pain trades.

“Once the dust settles by next weekend, we shall know the real picture”, says Marc Ostwald, Strategist at ADM Investor Services. The segment is hosted by Presenter Jenny Hammond and Tip TV’s Zak Mir.

Watch this segment to know if the risk-on action is here to stay and if so, will the Fed hike rates in December.

Key points

Market participants had hardly expected Trump to win hence much of the risk-on rally is nothing but the unwinding of the pain trades

Copper rally is smoke and mirrors - Open interest is falling

Parallels could be drawn between Trump and Clinton

Treasury sell-off is not a rout but once again a pain trade. Rates have jacked-off too high in a quick time. Yields may not sustain at these levels

Banks in the US could take heart from the current steepening of the yield curve, not sure if the surge in market volatility would lead to a sustained improvement in the bank’s trading revenues

Fed is likely to raise rates in December unless there is significant deterioration in the financial markets

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