What You Need to Know for Trump’s Inauguration
- By Ben Ford and Bilal Hafeez
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Summary
- Trump will be sworn in on 20 January at 12PM ET (5PM UKT).
- He is expected to deliver over 25 executive orders on his first day in office. This aligns with the new direction US presidents are taking to deliver early results.
- The first wave of orders is rumoured to focus on initial tariff increases, immigration, energy production, citizenship and school-level diversity and inclusion initiatives.
- Markets will care about the inauguration and potential policy surprises for two weeks. Historically, realised volatility has then died off.
- In rates, while reactions are mixed in the US 2Y and 10Y, the US 2s10s has tended to flatten around the inauguration.
Market Implications
- EUR/USD implied and realised volatility could rise in the two weeks following the inauguration. Afterwards, realised volatility is likely to decline quickly.
- The US 2s10s curve tends to flatten following the inauguration.
Key Details for Trump’s Inauguration
Congress has certified Donald Trump’s presidential election win, and inauguration day is fast approaching. Trump will be sworn in on 20 January at 12PM ET (5PM UKT).
Trump’s team is expected to deliver more than 25 executive orders and directives on his first day in office. This would align with a new trend of US presidents issuing more executive orders in the early stages of their terms (Chart 1).
The first wave of executive orders could include:
- Initial tariff increases, likely via Trump’s reliance on section 232 of the 1962 Trade expansion Act and section 301 of the 194 Trade Act. Dominique expects him to come good on his 20 November announcement of an extra 10% tariff on Chinese goods and 25% on Canadian and Mexican goods.
- Rolling back what Trump sees as overly permissive border policies. Recall, Biden’s early executive orders partially reversed Trump’s work. Trump could increase immigration officers’ ability to arrest, place more troops at the border, and restart construction of the border wall.
- Increasing energy production. Viresh reviewed the impact of Trump’s plans to ‘drill baby drill’ and compared Trump’s first term with his incoming second.
- Ending birth tourism.
- Reducing certain diversity and inclusion initiatives at school level.
Markets will care about the inauguration for a short time. In the two weeks after the inauguration, markets prove jittery at the possibility of policy changes; EUR/USD one-week implied volatility picks up, and realised follows suit (Chart 2). However, in the third week, markets jitters subside, and realised volatility tanks.
The curve tends to flatten around the inauguration. Previous inaugurations have seen mixed reactions in both the US 2Y and 10Y (Charts 3 and 4). However, there is a clearer sign that the curve has tended to flatten in the period (Chart 5).
