Investors are in a panic after President Trump's healthcare fail on Friday: The dollar is at a four-month low, U.S. bond yields are at the lowest levels of the month, and investors are fleeing to safe-haven assets.
These numbers come after the GOP healthcare bill, spearheaded by Speaker Paul Ryan, was pulled from the House vote around 4 p.m. ET on Friday (March 24).
Today (Monday), markets got the chance to react for the first time to the healthcare fail -- and react they did...
All but one of the Dow Industrials slipped this morning, with five components falling more than 1%. Dow futures tumbled as much as 184 points. (Later in the day, the DJIA had pared its losses to 47 points as of 3 p.m. ET.)
Investors seem uncertain if President Trump will be able to pass other more market-relevant reforms he's promised, like corporate tax cuts.
"The fear in the markets is that this loss of momentum will make it much more difficult for President Trump to move forward with any tax reform and tax cuts this year, especially since he faces fierce opposition from his own party," said Boris Schlossberg, managing director of FX Strategy BK Asset Management, in a note on Monday.
Here's a look at how markets are moving after the healthcare flop...
Dollar Slides to a Four-Month Low
The ICE Dollar Index (DXY) slid 0.9% on Monday morning, trading at around 98.94, its lowest level since November.
The index is down by about 3% since the start of the year.
The buck has been losing steam in recent weeks as it becomes apparent to investors that the new administration may encounter some difficulty fulfilling economic promises, like healthcare reform and tax restructurings.
"It's important that Trump delivers something of substance very soon, or the doubts will only grow," said Craig Erlam, senior market analyst at Oanda, to Marketwatch on March 27. "How deep a correction we'll see may well depend on how quick he is to bounce back from this defeat," Erlam warned.
U.S. Bond Yields Slump to Monthly Lows
The interest rate on the benchmark 10-year U.S. Treasury note fell to as low as 2.35% on Monday, the lowest level of the month. It was recently at 2.376%, compared with 2.396% Friday, according to Tradeweb. Yields fall as bond prices rise.
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Since Trump's November victory, buying stocks and the dollar while selling Treasurys have been popular moves among investors as they bet that fiscal stimulus via tax cuts and large infrastructure spending will boost growth and inflation. But those bets backed off on Monday after the healthcare bill was pulled.
Now, investors are putting their money elsewhere - somewhere they deem less risky...
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Investors Rush to Gold
The combination of the Fed raising its benchmark rate by 25 basis points last week and the healthcare debacle have the yellow metal trading at its highest level in a month. That's because in times of investor fear and uncertainty, investors buy safe-haven investments like gold. "When the markets are surprised, they run for gold, thanks to its legendary status as a hedge," Money Morning Resource Specialist Peter Krauth - our specialist in energy, metals, and mining stocks - explains.
Gold climbed by about $11.10, or 0.9%, to trade around $1,259.80 an ounce on Monday, according to Marketwatch.
And Krauth sees three or four potential triggers that could cause gold to skyrocket from here...
In fact, Krauth has developed a gold forecast exclusively for Money Morning Members.
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