Trump, trade wars, dollar and US yields - Westpac

The key source of uncertainty for the US remains the administration of President Trump.

Key Quotes:

"Following Gary Cohn’s resignation as Chief Economic Advisor, Secretary of State Tillerson has since been fired.

And, as we noted last week, murmurs of trade actions against China are surfacing.

Equities have been little affected given the market’s optimism over growth. But the US dollar is under pressure.

A material interest rate differential has opened up between the US and the rest of the developed world. Yet the US dollar index (DXY) is almost 13% below its December 2016 peak.

The impact of fiscal uncertainty and rising deficits is clear for all to see. It is not surprising then that the first point of business for President Trump’s new Chief Economic Advisor Larry Kudlow has been to stand in support of the currency and the outlook for the US economy."