Trump Trade Risks Grow as Bitcoin Gains Near $100

• U.S. stocks and the dollar surge, but bond market risks loom ahead in December.
• Bitcoin’s 37% rally raises questions about sustainability amid speculative risks.
• Euro, peso, and yuan struggle as global currencies react to Trump’s policies.

The financial markets showed sharp fluctuations after Donald Trump’s victory in the November 5 U.S. election. November saw clear winners and losers across asset classes, as U.S. stocks surged, the dollar strengthened, and Bitcoin’s price climbed sharply.

However, December could bring heightened volatility, with growing risks for U.S. equities and global currencies. Analysts warn that the Trump trade, which benefited U.S. assets while pressuring European exporters and emerging market currencies, may face challenges. Trump’s fiscal policies could trigger a bond market backlash and rising inflation, complicating the global outlook.

Currency Markets Face Mounting Pressure

The euro recorded its steepest monthly drop since early 2022, sliding nearly 3% to around $1.05. This decline stemmed from risks tied to U.S. tariffs, political uncertainty in Germany and France, and slowing regional growth.

Mexico’s peso also fell 2%, while sterling and China’s yuan dropped by just over 1%. Analysts predict continued volatility in the $7.5 trillion-a-day currency market, debating whether Trump’s policies will favor the U.S. while others lag or if market uncertainty drives these reactions.

Read also: U.S. Stocks May Fall 30%; What Does It Mean For the Crypto Market?

Bitcoin’s Meteoric Rise: Sustainable or Speculative?

Bitcoin emerged as one of November’s standout winners, soaring 37% and nearing the $100,000 mark. Optimism around a potential crypto-friendly regulatory environment under Trump drove the surge, signaling broader acceptance of digital assets.

Still, concerns of a speculative bubble persist. Experts caution that if Bitcoin crosses the $100K threshold, it could draw heightened attention but risk a sharp correction, leaving many investors vulnerable.

Mixed Outlook for Tech Stocks and Banks

Tech stocks posted their best monthly gains since June, with the Nasdaq 100 leading the way. Companies like Tesla and Nvidia thrived amid growing enthusiasm for artificial intelligence.

Yet, tariff threats and supply chain disruptions tied to Trump’s policies pose risks for the sector. Heavy AI investments could also lead to oversupply, potentially sparking market corrections.

Meanwhile, U.S. banks thrived, with stocks jumping 13% in November as deregulation hopes buoyed investor sentiment. In contrast, European banks faced a 5% slump, as economic weakness and rate-cut expectations held them back.

Bond Market Divergence

November saw a marked divide in bond markets. U.S. Treasury yields climbed 60 basis points, reflecting stronger economic data and rising inflation expectations. Analysts at Capital Economics project yields could hit 4.5% by year-end.

Conversely, Germany’s 10-year yields declined nearly 30 basis points due to worsening economic conditions. Japan’s bond yields rose slightly, driven by the yen’s post-election slide.