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Analysts at Natixis explained that Donald Trump is implementing an increasingly expansionary fiscal policy at a time when the US economy is close to full employment.

Key Quotes:

“The Federal Reserve wants to normalise its interest rates and perhaps raise them above the neutral interest rate.”

“The risk is then obviously that US long-term interest rates may rise above the level that is expected currently, with the associated risks:

Rising default rates and falling residential and commercial real estate prices;

Falling share prices, all the more as in the United States, they are underpinned by share buybacks financed by bond issues;

Accordingly, declining property and financial wealth, which always drives down demand and activity in the United States.”