The loose fiscal policy announced by Donald Trump, increasing expenditures and cutting taxes, will increase the US public deficit and will require an increase in the supply of bonds by the Treasury, that will steepen the yield curve in the USA. This policy would be implemented in an economy that is close to full employment, with little or no slack, with obvious inflationary consequences.
This, in turn, would lead to a tighter monetary policy by the FED, as announced yesterday . The increase in US interest rates, combined with an accommodative monetary policies in most of the G7 countries, is leading to an appreciation of the dollar. Besides that, we can observe positive impacts on economies highly dependent on exports like Germany.
For all the above reasons, we believe that the DAX index will reflect this and so our call is a long position today at the level of 11.300 points.