The global economy is witnessing a significant shift. President Trump secured victory in the November 5 election, paving the way for complete control of both houses of Congress. His presidency has already made a notable impact on equity and currency markets. A “Trump premium” in the dollar is expected to result in a 3% appreciation in the dollar index. As of November 14, 11:00 AM KL time, the dollar index is trading at 106.6.
Investors generally expect the swift implementation of trade tariffs and tax cuts. However, these measures are likely to exert inflationary pressure on the U.S. economy, complicating the Federal Reserve’s ability to cut rates rapidly and transition to an accommodative monetary policy as desired by the market. The 10-year Treasury yields are signaling to the market that inflation is poised to make a strong comeback.
TOP 100 BANKS BY MARKET CAPITALIZATION
The “Global Systemically Important Banks” (G-SIBs) have outperformed both the Nasdaq-100 and S&P 500 in 2024. Year-to-date (YTD) performance of leading ETFs:
- QQQ: +21%
- SPY: +21.8%
- GSIB: +25.6%
Despite concerns about an economic slowdown, these banks have excelled due to:
- Rising interest rates, which have boosted loan
profitability. - Improved credit quality and low loan default rates.
- Strong demand for investment banking services.
Big banks are effectively capitalizing on the benefits of higher interest rates, solidifying their strong performance in 2024.