The US dollar and bond yields rose yesterday after comments from President Donald Trump that he would be releasing his “phenomenal” tax plan in the next few weeks.
Investors have been waiting for details on Mr Trump’s election campaign pledge to stimulate economic growth with large-scale fiscal stimulus through infrastructure spending and tax cuts.
In a meeting with airline executives at which Mr Trump talked about the need to modernise the US air-traffic control system, the president also said his administration will be announcing “something phenomenal in terms of tax” over “the next two or three weeks”.
The US dollar rose more than one per cent against the yen to a six-day high, the euro fell to the day’s low against the dollar, and the greenback saw a one-week high against the Swiss franc
Benchmark 10-year note yields reached a high of 2.382 per cent after seeing a three-week low of 2.325 per cent Wednesday.
“It’s been a broad-based dollar rally driven by the headlines that Trump plans to announce something phenomenal on taxes in the next few weeks, in his words,” said Kathy Lien, managing director of BK Asset Management.
“That was really the crux of the dollar rally shortly after his election and I think investors are getting really excited about that again.”
The dollar had gained more than five per cent against a basket of major currencies in the six weeks after Mr Trump’s election but has given back some of those gains since as the president has focused more on trade and immigration than fiscal stimulus.
Major world stock indexes also climbed yesterday as investors took inspiration from corporate earnings and put aside for now the political risks that have dominated markets this week.
Investors had in recent weeks been pondering the potential impact of the protectionist policies of Mr Trump and threat of similar policies resulting from upcoming European elections in France and Germany.
Wall Street’s three main indexes hit record highs yesterday, amid gains across most sectors, led by financial and energy stocks. The S&P 500 financial index rose 1.06 per cent as bond yields rose and was on track to snap a three-day losing streak.
Crude oil prices rose 1.3 per cent, extending gains to the second day, supported by an unexpected drawdown in US gasoline inventories.
Oil prices rose after an unexpected draw in US gasoline inventories pointed to higher demand in the world’s biggest oil market.
Benchmark Brent crude was up 58 cents a barrel at $55.70. US light crude was 76 cents, or 1.45 per cent, higher at $53.10 a barrel.