The Trump rally: It's better to be lucky than good

PRESIDENT Trump's first address to the US Congress seemed to finally make believers of bond market investors. The decline in the yield on the 10-year Treasury bond in February was at odds with the idea the President Trump would stimulate the US economy with tax cuts, infrastructure spending and de-regulation. Ten-year bonds gave back all of their February gains in the first session following President Trump's speech.

There are very few historical reference points for Donald Trump's first month in office. It has been a baptism of fire, not least at the hands of the media. What's interesting is the very positive reaction from financial markets. The S&P 500 has rallied 12 per cent since his election and other developed market indexes have rallied similarly is US dollar terms. The STI has rallied 12 per cent since the election and 9 per cent year-to-date, its strongest start since 2012.

Parallels with the Reagan rally - after 1982 every dip was a buying opportunity - animate hopes for a Trump rally. And there is no mistaking the president's seriousness in wanting to boost US economic growth. In his address to Congress the president offered broad outlines of his policy proposals: repealing and replacing Obamacare, overhauling the tax code and a big infrastructure spend.