Unspoken remarks made during Donald Trump’s inauguration speech and related events on Monday seemed to boost U.S. stocks while depressing the currency and U.S. Treasury yields.
Bitcoin was also declining after rising to a new high of over $109,000 early Monday.
According to Trump, his administration “will tariff and tax foreign countries to enrich our citizens,” but he has threatened to put 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on goods from China. These tariffs have not yet been implemented.
Due to the Martin Luther King Jr. Day holiday, the majority of U.S. financial markets were closed on Monday. However, early Monday foreign trading showed increases in U.S. stock-index futures following a Wall Street Journal story that Trump will sign a memorandum to investigate trade policies without enacting new duties.
“In other words, there might not be much of a shock-and-awe effect on the markets from Trump 2.0 initially since most of it has been discussed by Trump during his campaign speeches,” wrote Ed Yardeni, president of Yardeni Research. The markets may instead keep their attention on Fedspeak and the most recent earnings season. Last week, both were bullish.
A pullback in Treasury yields, which saw the rate on the 10-year note BX:TMUBMUSD10Y fall from a 14-month high above 4.80% to end the week near 4.6%, was attributed to remarks made by Federal Reserve Governor Christopher Waller last week that left the door open to multiple rate cuts in 2025. This was in addition to a lower-than-expected December core consumer-price index reading. With the Dow Jones Industrial Average DJIA and S&P 500 SPX recording their best weekly performances since the week ending Nov. 8, the yield retreat—which moves in the opposite direction of debt prices—helped stocks regain their footing.
Late Monday saw a 231-point, or 0.5%, increase in Dow futures (YM00). The Nasdaq-100 (NQ00) and S&P 500 (ES00) futures both saw a 0.5% increase. At 4.571%, the yield on the 10-year note had decreased by almost 4 basis points. Additionally, the dollar was weaker. A measure of the currency’s value against a basket of six significant competitors, the ICE U.S. Dollar Index DXY, fell 1.2%. Last week, the gauge reached its highest level since November 2022.
Treasury yields will probably keep dictating market movements as investors assess a barrage of administration actions and anticipated statements in the next week.
Since last fall, yields had backed up considerably. A number of factors have been identified, including the possibility that strong import tariffs could increase inflation and worries about the growing U.S. fiscal imbalance and the likelihood that Trump will do little to reduce it or maybe increase it despite his promises to reduce spending.
Early Monday, Bitcoin (BTCUSD) reached a high of $109,000, but by Monday night, it had fallen down below $102,000. In anticipation that Trump will enact measures that will support cryptocurrency assets, bitcoin and other cryptocurrencies have surged. Additionally, a trading frenzy was sparked by Trump’s weekend announcement of a memecoin and the hurried introduction of a coin honoring his wife Melania.
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“The first lady and President Trump have both been experimenting with cryptocurrencies. In an email, Eoin Treacy of Fuller Treacy Money stated, “Efforts to give the crypto sector legitimacy and the unambiguous verbal support for the sector have been clear supports for the price until today.” “That led to a significant jump in the price in early trading today.”
However, he said that traders might have been taken aback by the inauguration speech’s complete omission of any reference to bitcoin, which allowed it to return to its range.
