US: Trumpflation cracks - Nomura

Analysts at Nomura explain that the benign risk environment has been shaken by US political and fiscal uncertainty and while the decline in global equities has been minor in a historical context, it illustrates the vulnerability to a potential re-evaluation of the Trumpflation trade.

Key Quotes

“The key upcoming test will be the House vote on the American Health Care Act (AHCA; Thursday, 23 March US evening time). Failure to pass the bill could prompt markets to question the outlook for other fiscal reforms, which could flow through to further risk aversion.”

“Our analysis shows that the commodity bloc (AUD, NZD and CAD) remains the most sensitive to swings in US equities, while EUR, JPY and CHF outperform in a risk-off environment.”