Big global investors are exiting popular trades that bet on U.S. President-elect Donald Trump’s tax and tariff policies boosting Wall Street and wreaking damage abroad and swooping in on some of the Nov. 5 election’s biggest market victims.
He said this had convinced him to buy non-U.S. assets that may have been excessively sold - like European car-makers and the Mexican peso - and close pre-election positions that profited from sterling and Chinese tech stocks falling. “There will be a really good opportunity in assets that have weakened ahead of and after the election, we see a lot of value,” he said.
The euro, down about 3% since Trump’s win, hit a one-year low of $1.052 this week and 10-year U.S. Treasury yields jumped 14 basis points to 4.47%, as traders bet on higher U.S. interest rates and inflation. But Edmond de Rothschild Asset Management chief investment officer Benjamin Melman said he would keep his European exposure at market-neutral levels instead of joining the selling.
Craig Inches, head of rates and cash at Royal London Asset Management, which runs almost 170 billion pounds, said he had taken profits on a pre-election bond trade that benefited from U.S. inflation expectations rising.