Buy the rumour, sell the fact is a well-worn truism. The question is whether the Trump tax cuts will fall into this pattern (i.e. the stock market increases while the potential of tax cuts exist, only to fall once the legislation is actually passed) is a good one and there are many arguments for and against.
Overnight, Trump’s tax cuts advanced through the House of Reps only to see US markets pull back – lending some weight to the fears:
European markets were also down:
The USD traded stronger throughout the day before dropping following the vote:
While bond yields jumped at the short end:
and the long:
Oil bucked the trend to edge higher as we saw a larger than expected draw-down in inventories:
Most other markets were relatively quiet.
After the vote, a procedural error was discovered, the House is expected to pass the bill tomorrow and then the Senate to vote shortly after.
I’m leaning toward a “sell the fact” event, but I don’t have high convictions and it would probably be a shortish term buying opportunity.
Damien Klassen is Head of Investments at the Macrobusiness Fund, which is powered by Nucleus Wealth.
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.