More than $1 trillion was wiped off the value of bonds around the world as soon as Trump won the elections. Yields on U.S. 30-year bonds, jumped the most this week since January 2009. Bloomberg reported that European government bonds extended their selloff Friday, with the yield on Italian 10-year securities climbing above 2 percent for the first time since September 2015, while benchmark German 10-year bunds declined for a fifth day, pushing the yield to the highest since February. Adam Donaldson, head of debt research at Sydney-based Commonwealth Bank of Australia said that “The strong bias toward fiscal expansion and inflationary policy represents a stark change to the malaise of recent years. This opens the door for the Fed to hike in December, but also more quickly in 2017 and 2018 than previously expected.” Global bonds tumbled after Trump’s triumph boosted the view that he will ramp up spending and potentially widen the budget deficit, stoking inflation. Rising yields in Europe also reflect waning prospects for the European Central Bank to boost its stimulus as consumer-price growth accelerates.
So the signs are there for an optimistic market. The question right now is that would there be a drop before the bull? 2200 is still a number to be broken if the market is convinced for a bull.