In terms of market reaction to this so-called 'surprising' victory - that yet again none of the pollsters saw coming, leaving their reputation in tatters - so far we've seen a repeat of dominant herding tendencies. Current thinking is that the new president will increase government spending, cut taxes, ringfence chunks of the US economy - all with a view to foster more and better jobs, causing inflation and higher interest rates.
Bond yields, which had been backing up gently since July, accelerated so that benchmark 10-year Treasuries rallied from a record low yield of 1.32 per cent to what looks set to be a massive spike high at 2.30 per cent. Gapping higher on Monday's opening, the move is seen as the last in this little series. The sharpest move in that direction since 2013, it retraced between half and a Fibonacci 61 per cent of the drop in yields since Q1 2014. The move stalled around trend-line resistance taken from 2006's high point, the top of the right-angled triangle that has dominated since 2010, and well below the secular downtrend since 1980. All of which suggest it is yet another of the sort of thing we have lived with over many decades. The law of very small numbers makes it look especially dramatic.
What is more difficult to explain is the sell-off in US Treasury inflation-protected securities (Tips). Four-year paper lost between 1 per cent and 2 per cent of face value, while 10-year and the iShares Tip Bond managed to drop by 3 per cent. Perhaps this only goes to show how little investors know about this type of product. Meanwhile, UK gilts have held up fairly well, but eurozone sovereigns have been hit by potential political uncertainty.
The US dollar strengthened against nearly all currencies, as one would expect with higher interest rates, ironically except against sterling where we are no closer to parity which so many pundits had predicted. Gaining 1 per cent against the Chinese yuan, two against the yen, three versus the Turkish lira and four to the New Zealand dollar. Hardest hit were the South African rand (partly because of its political issues) and not surprisingly a scary 13 per cent to the Mexican peso. Most of these moves can be seen as a continuation of long-term trends.
The stronger US dollar should mean lower commodity prices, which has been the case for precious metals. Funnily enough many investors thought that gold ought to benefit from a Trump victory, flocking to so-called tried and tested safe havens in an increasingly uncertain world. The jury here is still out, with prices hovering around this year's midpoint. What has become clearer is that buying gold because of the Donald is not necessarily joined-up thinking.
The Dow Industrials is the only US index to edge to a new record high this month. It's obviously an outlier.
