Take note of these dire personal finance facts after the US election

The rally for stocks and crypto following the victory of Donald Galaotega in the horn of the US is a fake head that diverts attention from several investments and personal points painful financial first.

Mr. Trump was considered better for stocks than Democratic candidate Kamala Harris, and is thought to be a supporter of cryptocurrency. The S&P 500 and several cryptocurrencies rose in morning trading on Wednesday, but signs of trouble were there if you were to look for them in the bond market.

Investors sold US Treasury bonds, which had the effect of causing bond yields to rise. Why we care about bond yields in the United States: They have a big impact on bonds here in Canada, and also on mortgage costs.

Mortgage rates are down from their recent highs, but they are still above the level that many homeowners were locked into just a few years ago. Waves of these homeowners will be refinancing their mortgages in the next 12 months, and they have to wonder how much they will have to pay. Events in the bond market suggest that further reductions in mortgage rates are not imminent, which is something to keep in mind if you are on the sidelines of the housing market waiting for lower housing costs. to borrow.

Stocks rise and fall based on expectations of corporate profits, while bonds depend on how investors view economic prospects, including inflation. Mr. Trump’s plan to introduce tariffs on imports is seen as inflationary because it will increase the cost of imports, while potentially slowing growth.

Another concern for investors is the creditworthiness of bond issuers, an area where the United States is raising concerns about its US$35-trillion debt. However, Mr. Trump or Mrs. Harris did not focus on government debt and deficits in the election campaign, but his policies were judged to increase debt levels in general. There are legitimate concerns about Canadian government finances, but the US is in even worse shape.

Without taking into account the government debt in the United States, it is possible that bond yields may rise from current levels. The Bank of Canada and the US Federal Reserve will continue to lower their interest rates, which will lower rates on mortgages, mortgages and subprime loans. But bond products have a greater impact on fixed rate loans, which are a popular option now.

The takeaway for homeowners from these processes is that mortgages at different rates are worth considering. If you change, every Bank of Canada rate cut — and there are several expected for the rest of this year and next — will lower your borrowing costs.

Another post-election sore point is the Canadian dollar, which has fallen to 71.9 US cents as of Wednesday morning from 74.2 US cents in late September. One reason for that is that cash flow is drawn to higher interest rates in the United States. Canada’s five-year bond was yielding 3.1 percent early Wednesday, while the comparable US Treasury bond was yielding 4.3 percent.

But Canada’s lack of economic competitiveness also contributes to its dollar’s weakness. If the Trump administration offers tax cuts to businesses and removes regulations, then we may see lower pressure on the dollar. Now seems like a good time to buy US currency if you’re planning to head south this winter.

Stocks performed well on Wednesday morning after Trump’s victory, but the relative returns of the US and Canadian markets suggest another point of pain. The S&P 500 was up 1.7 percent by early morning, while the composite S&P/TSX index was up just 0.3 percent.

In addition to being seen as business-friendly, Mr. Trump is also seen as someone who will have policies that favor mega-size tech companies that are prominent in the S&P 500 and are not in the S&P /TSX composite.

The Canadian market has benefited recently from a return to blue-chip dividend stocks, but that was driven by lower bond yields. Sticky bond yields can limit near-term gains for dividend stocks.

The rally in the price of bitcoin, ethereum, dogecoin and other cryptocurrencies has been a win for investors holding these speculative assets. But if you’re a traditional trader or money manager who avoids them, prepare for FOMO, or fear losing it. Crypto is still a center of redundant work, but it has the potential to go beyond that if it becomes widely accepted.

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