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Jean-Luc Proutat, Research Analyst at BNP Paribas, notes that in 2018 and with the approach of the mid-term elections, the Trump administration is delivering massive economic stimulus.

Key Quotes

“Thanks to historic corporate tax cuts, increased military spending and transfers to farmers, which are the first collateral victims of the trade war with China. While supporting the business climate, these actions have exploded the Federal deficit, which actually reports one of its biggest increases ever outside of a recession.”

“One could say it is no big deal for the United States, thanks to the dollar’s international status. Yet, the fiscal boost has its limits. In many respects, US policy consists of accelerating an engine that is already close to full speed. As a result, tensions over capacities arise, interest rates pick-up. At 3.23% today, the 10-year Treasury yield reaches its highest level since May 2011.”