Post-Election Business Outlook
The President Trump era is just beginning. Whether you were a supporter or not, the next few years should be very interesting and different. The early business community optimism is evident. The stock market swung upward immediately. Anticipated relaxation of regulation and a more favorable tax code could spark investment in the future.
The banking industry is anticipating an improved regulatory environment as evidenced by the movement in bank stock prices since the election. The KBW Bank Index, an EFT made up of 24 key U.S. banking institutions, is up over 25% since the election.
Short-term rates increased slightly in December as the Fed finally took a position and moved up, citing improved labor conditions and anticipated inflation. The longer, 10-year Treasury Rate has moved even more, which is a signal of higher rates in the future, but not dramatically. The 10-year Treasury hit a low of 1.36% in July and closed out 2016 at 2.45%. We can expect a couple of increases in 2017 as the economic conditions are anticipated to improve, although the Fed wants to remain accommodative to business growth.
We will need to watch these factors closely. And at this point, future increases and investment are all anticipated, so we will have to wait and see if changes actually occur.