10 Reasons For Caution As Markets Lose ‘Trump Trade’ Mojo

Global stock markets this week suffered their biggest shakeout since November's U.S. election amid growing disappointment at President Donald Trump's failure to deliver more details on promised tax cuts, infrastructure spending and financial deregulation.

The trigger appears to have been the new administration's struggle to get its prioritized health-care reform bill through Congress and what that says about the likely timing of and opposition to the rest of his fiscal stimulus plans.

But the tiring of the so-called "Trumpflation trade," which has lifted world stocks about 10 percent since the election, is not the only factor that has been unnerving markets. Following are 10 others that have contributed to the sudden bout of investor angst this week:

1. INTEREST RATES

The near-decade of super-easy money, QE worth trillions of dollars, euros, yen and sterling, zero (and even negative) interest rates is over. Yes, there's still a huge amount of stimulus cash washing through the world financial system. But the tide is turning. The Federal Reserve has raised U.S. interest rates twice and wants to raise them further, and the European Central Bank has intimated it is considering lifting one of its key interest rates far sooner than expected. Even if this is a gradual process akin to an oil tanker changing direction, markets are getting unnerved.

2. YIELD CURVE

While Fed interest rates and short-term U.S. yields may be rising, longer-term yields aren't. This narrowing of the gap between the two, dubbed the "flattening" of the yield curve, suggests investors don't believe growth or inflation will be strong enough to warrant interest rates going much higher. Flatter yield curves often herald the onset of slower growth or even recession.