SSGA: Tailwinds for equities after Trump's win

SSGA: Tailwinds for equities after Trump's win

November 8, 2024

US Elections
Aandelenkoersen

Jennifer Bender, Chief Investment Strategist at State Street Global Advisors, discusses what a Trump win signal for debt, deficits, and inflation risks, and what the path ahead is for equities.

'Clearly, the results of the election have refreshed the market’s worst fears, particularly around debt, deficits, and inflation risks. However, current levels of yields in relation to underlying growth and inflation trends continue to offer a reasonable risk premium for investors. While the evolution of those trends over the next several years is important, they are anything but straightforward. We remain overweight duration and are focused on intermediate Treasuries, while avoiding longer maturities in recognition of potential tail risks associated with rising debt levels and inflation fears.

We see inflationary versus deflationary pressures being uncertain for some time, a bit like a seesaw or pendulum that is resetting itself. Which side will win out may not be very clear for some time. At the very least the path forward for equities looks clearer. Historically soft landings, which we appear to be in the middle of given the latest economic readings, tend to bolster equity markets. Resilience in US corporate earnings adds to this healthy picture and Trump policies, such as an extension of the Tax Cuts and Jobs Act (TCJA), are likely to keep these tailwinds going for equities.'

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