European stocks are expected to open higher on Tuesday as the U.S. dollar stood near a thirteen and a half year high and treasury yields continued to rise as traders anticipate President-elect Donald Trump’s policies will stoke inflation.
London’s FTSE 100 is seen up 26 points at 6,780, the French CAC is called 25 points higher at 4,538, while the German DAX is expected to open 40 points stronger at 10,745.
The dollar index – which measures the greenback against a basket of currencies – was around $99.879 in Asia trade. It had risen to 100.22 earlier. If it manages to break the 100.51 mark that it reached in December 2015, this would mark the highest level since 2003.
U.S. 10-year Treasury yields also continued to tick up.
Traders will be watching Trump’s economic policies closely because of the effect it could have on monetary policy. The Republican has said that he plans to spend on infrastructure and cut taxes to stimulate the economy. Increased fiscal stimulus could have an impact on the Federal Reserve’s interest rate hiking path.
A number of Fed officials spoke on Monday about Trump’s policies. Richmond Fed President Jeffrey Lacker said that a “more stimulative fiscal stance” would “bolster the case for raising rates”.
Source: CNBC
