Johanna Kyrklund
George Brown
James Bilson
Lisa Hornby
Tom Wilson
Simon Webber
David Boyce
Alex Monk
Markets have responded to Donald Trump's election victory by anticipating pro-growth policies and higher inflation. Schroders' experts share their longer-term views on what his return to office will mean for the US economy and world trade, global equities, fixed income and the energy transition.
Johanna Kyrklund, Group Chief Investment Officer:
“Trump’s victory in the US presidential election has not changed our positive stance on global equities, with a preference for US shares. In his previous administration, Donald Trump was focused on the Dow Jones as a barometer of his success.
“In the background, we continue to see a soft landing for the US economy. Fiscal policy is likely to remain supportive.
“The key risk is on trade: we could start to hear pronouncements from Trump quite soon. In the short-term, a protective trade stance is supportive of the US dollar and poses a risk to growth outside of the US. We would expect the Chinese authorities to continue with stimulative policies to offset this.
“Europe becomes more of a concern, however, as it could then become caught in the crosshairs of a more hostile trade environment – without the unified leadership that is required to tackle it.
“We continue to advocate owning bonds for old-fashioned reasons - to generate income. The role of bonds as diversifiers continues to remain challenged by the likelihood of expansionary fiscal policies.
“In the big picture, however, we continue to see a low risk of a hard economic landing and view this administration as increasing the risk of inflation rising later in 2025 due to their trade and fiscal policy.
“The worst outcome would have been a contested election, which we have avoided.”
Economic impact: Trump victory to be reflationary for US economy
George Brown, Senior US Economist:
“After what had looked set to be a close contest, Donald Trump has managed to pull off a decisive victory over Kamala Harris. In doing so, he has become only the second individual to be elected to a second non-consecutive term as president.
“The only question that remains is whether the Republicans will also take both chambers of Congress. While they have regained control of the Senate, it remains unclear how the House of Representatives will shape up amidst tight races in California and New York.
“However, the party is tipped to retain their majority In the House. Betting odds on Polymarket currently assign a probability of over 90% on a so-called 'red sweep', a marked rise from the 35% they had been when voting closed in states on the East Coast.
“Trump is therefore well-positioned to implement his policy agenda. He has pledged to cut taxes and regulation further while also raising tariffs and restricting immigration, the combination of which will be reflationary for the US economy.
“And so, later this month we intend to further raise our above-consensus 2.1% growth forecast for 2025. Our previous forecasts in August were conditioned on betting odds at the time, which had pointed to a divided government under Harris.
“Inflation should also prove stickier, reinforcing our conviction that the Federal Reserve (Fed) will not deliver as much easing as it has indicated it will. Given our view that the neutral rate lies around 3.50%, Trump’s return to the White House likely means that the Fed needs to keep rates above this level.” (The neutral rate is a theoretical interest rate deemed neither too restrictive, nor too loose for growth and inflation to settle back onto steady and predictable paths.)
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