Trump-Era Investments Fade as Optimism Wanes

A month into President Donald Trump's second term, the initial euphoria surrounding various investments has subsided.

US Equities Underperform

While small-cap stocks initially surged after the election, they have since trailed large-caps due to rising interest rates and the impact of potential trade wars. Energy and financial stocks have also experienced mixed results.

Dollar Weakens

The dollar, initially expected to strengthen due to tariffs, has lost momentum. Traders attribute this to overestimation of the tariffs' impact and continued turbulence from tariff announcements.

Treasury Yields Flattening

Bets on higher Treasury yields and a steepening yield curve have dwindled. The administration's emphasis on debt reduction and steady bond sales has eased concerns about federal deficits, leading to a flatter yield curve.

Cryptocurrencies Cool

Crypto assets experienced a post-election rally but have since moderated. Trump's promised regulatory support has yet to materialize, and scandals involving memecoins have dampened investor sentiment.

Declining Investor Sentiment

Over the past month, investor sentiment has shifted more bearish amid concerns about inflation, potential interest rate hikes, and the impact of tariffs on economic growth.

Conclusion

The initial enthusiasm for "Trump trades" has diminished as investors contend with a volatile and uncertain market environment.