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According to Jan von Gerich, Global Fixed Income Strategist for Nordea, US midterms are set to result in a divided Congress, largely paralyzing Trump’s domestic agenda.

Key Quotes

“He will probably try to govern with executive orders and further escalate the trade war, which will add downside risks to risk appetite and the dollar.”

“While Trump’s behaviour is often unpredictable, he will probably now move to test the limits of his power without Congressional approval.”

“Trump is likely to take an increasingly tough stance on the trade war, while new debt ceiling and government shutdown battles loom in 2019.”

“While the election result was not a big surprise, it does put some downward pressure to equity prices, the dollar and long yields, and adds to the risk of a US recession in 2020.”