Credit to bloomberg.
1. The bond slump
“The upside potential on bonds is very limited at this point, but the downside potential is big, and you can lose a lot,” said Mercadal. The bond market is the largest in term of value in the world, lookout for any sign of weakness.
2. U.S. Dollar
A sudden rise in the greenback might hurt the country’s exporters and derail the rebound in corporate profits after last year’s earnings recession. It would also be negative for emerging markets as investors would favor U.S. assets to avoid being exposed to weakening local currencies. The pain could also spread to commodities, priced in dollars, and mining companies.
“Markets have high expectations about Trump’s policies and there’s a risk of disappointment in the implementation of these policies, if they’re not as strong as hoped for or if they get delayed by Congress,”
Deutsche Bank AG says it’s China that could be the biggest threat to market stability. The country’s macroeconomic momentum will likely weaken over the coming months...
5. The Fed
An acceleration of inflation could prompt the Fed to increase rates faster, which may rein in economic growth and dent investor appetite for risk assets. Benichou said, referring to derivative markets indicating traders are protecting against equity volatility in the run-up to the Dutch and French elections.
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