The Trump Paradox: Equities Soar, Approval Tanks on Inflation Fears

A divergence has opened between Wall Street and Main Street in the United States, creating a new variable for Forex traders analyzing the durability of the “Trump Rally.” Despite the S&P 500 hitting record highs, President Trumps approval rating has collapsed to a net -20%, the lowest of his second term.

The Tariff Backlash

Data from The Economist/YouGov indicates the primary driver of discontent is the administration's aggressive tariff regime.

• Cost of Living: 69% of voters explicitly blame tariffs for rising daily expenses.
• Credibility Gap: In a direct challenge to White House authority, 44% of Americans state they trust Fed Chair Jerome Powell to manage interest rates, compared to just 18% who trust the President.

Macro Interpretation

For currency markets, this political weakness suggests the White House may be forced to pivot toward populist, dollar-weakening policies (such as pressure for faster rate cuts) to regain voter support. However, the public's preference for Powell's stewardship suggests that political attacks on the Fed may backfire, potentially strengthening the central bank's resolve to keep rates restrictive if inflation—driven by the very tariffs voters despise—remains high.

The “Trump Trade” (Long USD, Short Treasuries) faces headwinds if the administration's political capital erodes to the point where it can no longer effectively steer fiscal policy or bully the central bank.