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How the Failed Healthcare Act and the Fed Are Affecting Markets

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How the Failed Healthcare Act and the Fed Are Affecting Markets PART 1 OF 6

American Health Care Act Failure Dents Investor Confidence

Republicans fail to agree on American Health Care Act

In a dramatic anticlimax on March 24, the Republican Party pulled the plug on the proposed American Health Care Act (or AHCA), which was expected to repeal and replace Obamacare. The Trump administration failed to garner support from within its own party, and the Democrats have been against the new bill from the beginning. Investors’ reaction to the event was to be expected. They were disappointed that Trump, “the deal maker,” failed at his first attempt to pass a bill despite the Republican Party having a majority in the House and Senate.

American Health Care Act Failure Dents Investor Confidence

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How did markets react?

Markets around the world saw selloffs after this surprise move as investors began to question the optimism surrounding the Trump administration, which pushed markets to new peaks this year. The S&P 500 Index (SPY) and the US dollar (UUP) (USDU) witnessed some pressure after the event but have since recovered from Friday’s low. Safe havens gold (GLD) (GDXJ) and government bonds (IEF) have seen increased demand, reflecting investor risk aversion. This kind of volatility can be expected to continue going forward as markets will likely continue to be anxious about any future developments on the policy front.

Optimists about the Trump administration want to believe that this failure at the beginning is just a speed bump along the way to a rally. In this series, we’ll look at how recent developments could affect various asset classes and if the optimism will continue.

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