Donald Trump growth trades unwind

Stocks, bond yields and the dollar are all falling, yield curves are flattening and sterling is marching higher. The “reflation” trades of 2016 that were supposed to mark a turning point in global markets are fading.

The question for investors is whether this is the playbook for the rest of the year, or whether the trends of 2016 will resume in the second half of the year.

What is clear is that much of the conviction with which investors went into 2017 has been lost. This week, Goldman Sachs ditched its long-standing bullish call on the dollar, and Deutsche Bank did likewise with their gloomy sterling outlook. Following the developed world’s two most seismic events last year — the US presidential election and Britain’s vote to leave the EU— investors around the world had positioned for a broad-based reflation trade.