Traders have been unwinding some risk-driven trades that have supported the the equity market rally since the U.S. election on November 8, reports Jon Sindreu for the Wall Street Journal.
The markets have strengthened on hopes that Trump would slash taxes and regulations while bolstering infrastructure spending to stimulate further growth in the U.S. economy. Investors are now waiting on further details in these proposed policies, along with fourth quarter earnings results, to determine whether growth and inflation will maintain their pace.
”A lot of the indicators we follow are now pointing at the market being overstretched,” Andrew Pease, global head of strategy at Russell Investments, told the WSJ. “The U.S. economy’s fine, but markets have fully priced that in already.”
Furthermore, traders will be watching Federal Reserve chairwoman Janet Yellen’s speech Wednesday evening to gain hints on where interest rates are likely to be heading.
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