Donald Trump win sparks $1 trillion sell-off in bonds

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Donald Trump’s shock US election win has dealt a $1 trillion (£792 billion) hit to global debt markets this week in one of the biggest sell-offs for two decades, figures showed today.

Trump’s hints of an infrastructure spending spree — as well as big tax cuts — have fuelled concerns over a soaring US deficit. That prompted investors to sell out of Treasuries, the world’s risk-free asset, to pump money into shares instead to cash in on the potential benefits of a pro-business president.

Bank of America Merrill Lynch’s figures showed the world’s bond market fell $1.1 trillion to just over $48 trillion over the course of the week. But as well as the US Treasury sell-off, emerging-market debt and currencies have been hammered because of Trump’s protectionist rhetoric on trade with China.

But the pound — which has fallen since the vote for Brexit — has emerged a big winner in the wake of the US election vote, climbing above $1.26 for the first time since the Tory conference a month ago.

Deutsche Bank analyst Jim Reid said: “This reflects the view the UK could actually be a beneficiary of trade with a Trump presidency and so easing some Brexit concerns.” Copper, meanwhile, looked on course for its best week in more than 30 years, gaining 16% on the US spending hopes.

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November 12, 2016 |
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