Investing.com — President-elect Donald Trump is unlikely to offer detailed cues on his policy agenda at Monday's inauguration, but Macquarie could be discussed in Trump's speech, moving markets We have outlined three likely topics.
“All eyes will be on Monday's inauguration, which coincides with a federal holiday, Martin Luther King Jr. Day. And I can't help but wonder what President Trump will say (or not say at all) that could move markets,” Macquarie analysts said in a note.
They added that Trump is not expected to provide detailed information about the policy because it could “reduce the president's room to later negotiate with Congress and foreign counterparts.” . Still, analysts say testimony from Cabinet nominees Scott Bessent and Marco Rubio provides a rough guide to three topics that could come up during the speech, including the deficit and defense, immigration and energy. He said he was flagging it.
1. Deficit and defense
President Trump may discuss increasing defense spending, asking NATO allies to spend 4% to 5% of their GDP on defense, up from NATO's current guideline of 2%. Analysts said that without new sources of revenue, increased defense spending could mean widening budget deficits at home and abroad, pushing up Treasury yields and global sovereign yields.
However, these concerns could be offset if President Trump makes a credible commitment to reduce the U.S. budget deficit to 3% of GDP, as Treasury Secretary nominee Scott Bessent has suggested. There is. President Trump is likely to emphasize “pro-growth” policies and the use of AI to reduce government spending as a way to address the budget deficit.
2. Immigration inspection
Mr. McCauley warned that President Trump's immigration policies, including closing the southern border and implementing the “largest deportation program in U.S. history,” could raise new concerns about inflation. President Trump had previously threatened to reinstate the travel ban and abolish birthright citizenship. Analysts cautioned that “this type of rhetoric and the promise of executive orders related to the presidential inauguration could also push yields higher.”
3. Energy and Russia/Ukraine
President Trump's approach to the Russia-Ukraine conflict could impact both currency and commodity markets. Momentum could build if President Trump reiterates his approach to “concession and compromise,” as Secretary of State nominee Marco Rubio has suggested.
“It's important for everyone to be realistic,” Rubio told the Foreign Relations Committee on January 15. “We need to make concessions, not only from Russia but also from Ukraine.”
However, if President Trump emphasizes the need for additional sanctions against Russia, oil prices could rise further. Regarding domestic energy policy, President Trump's pledges to increase domestic fossil fuel production and scale back clean energy efforts could have varying effects on oil prices, depending on the relative elasticities of supply and demand. McCauley said there is a gender.
Analysts suggested that the themes President Trump emphasizes and the tone he uses could have a significant impact on market sentiment.
”[T]”The topics being touched on and the tone in which they are used may indicate short-term priorities, which traders may jump on to signal market direction,” they added.
