Trump 2.0: Brace for Market Volatility and Economic Shifts

A new report by LLama Research suggests that Trump's potential second term could incite volatility in global financial markets due to high public spending and tax cuts, sparking inflation and increased bond yields. This shift may affect the dollar's dominance and exert pressure on international economic stability.

LLama Research has released a report forecasting that a potential second term for Donald Trump, nicknamed 'Trump 2.0,' could lead to increased volatility in global stock and bond markets. The predicted economic agenda includes high public spending and tax cuts, likely driving up bond yields and creating turbulence in financial markets.

Trump's focus on defense, energy, and artificial intelligence spending, coupled with tax reductions, might boost equities in the short term. However, these policies could pressure bonds with rising yields amid growing deficits, sparking potential inflationary concerns.

As high debt levels and inflation loom, the report suggests the dollar's dominance could weaken, despite short-term strengthening. The Federal Reserve might struggle to counteract due to limited response options, possibly leading to a downturn. Trump's 2024 agenda focuses less on tariffs and trade deficits and more on currency dynamics, highlighting a complex global economic landscape.

(With inputs from agencies.)