US: Trump’s victory to have little direct impact near-term but more over medium-term - Wells Fargo

According to analysts from Wells Fargo, Trump’s surprising victory should have little direct impact in the near-term but will likely have more meaningful implications for the medium-term outlook.

Key Quotes: 

“While increased uncertainty has rattled the markets in the short-term, we expect the impact to be short-lived and look for markets to quickly get in sync with Trump’s growth-oriented economic policies.”

“We are leaving our near-term forecast largely unchanged, as time will be needed for the President-elect to formulate policy initiatives and move them through congress. While lower taxes and increased defense and infrastructure spending are potentially huge stimulative forces their impact is much more likely to become apparent in 2018 than in 2017. Trade and immigration reform will also take time to be implemented, and may produce a slight near-term drag on growth and push inflation and interest rates higher longer term.”

“The financial markets are forward-looking and will try to incorporate these changes, but should also be influenced by the near-term uncertainty. Bond yields initially declined following the election results and stock markets sold off around the world. Fourth quarter growth should be little impacted by these developments. We look for real GDP to riseat a 1.9 percent pace in Q4 and still expect the Fed to nudge the federal funds rate higher at the December meeting.”