Global weekly: Who was that man?

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President Donald Trump was described as “surprisingly presidential” by many news organisations after his speech to Congress this week. Markets liked what they saw.

The positive market reaction following US President Donald Trump’s speech to the US Congress this week adds weight to the perception that risks are receding and the pace toward normalisation is quickening.

Macroeconomic data is strengthening and political risk is declining in both the US and Europe. The more conciliatory approach by Donald Trump, which was in evidence in his Tuesday address, increases the likelihood that some version of his tax reform and infrastructure plans will be implemented by a unified Republican Congress and presidency.

Strong underlying US fundamentals are expected to propel rate hikes by the Federal Reserve starting in March. ABN AMRO Group Economics expects that 2017 could see three rate hikes, depending on economic data and fiscal developments.

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