The Dow Jones Industrial Average recently completed its eleventh consecutive record close, a sign that the Donald Trump rally was still going strong. But a closer look at the numbers suggests the surge may be on its last leg.

Stocks are up more than 10% since Trump won the presidential nomination on November 8. By the new year, the uptrend was losing momentum, leading some analysts to conclude that a major correction was on the way. After a period of lateral moves, stocks resumed their uptrend on February 9 after Trump promised to unveil “phenomenal” tax cuts in the coming weeks. That promise sent Wall Street to new highs, which could serve as a clear sign that investors were drawing inspiration from the White House.

However, the so-called Trump reflation trade, which tracks expectations of rising inflation and higher interest rates, is beginning to sputter. This suggests that bond investors expect inflation, interest rates and economic growth may not rise as boldly under Trump as previously expected.[1] In the absence of those expectations, stocks may be poised for a short-term correction.

Of course, investors shouldn’t underestimate Trump’s ability to talk up (or down) the financial markets. The President has already shown an uncanny ability to influence investor sentiment through off-the-cuff remarks during press conferences. This may continue for the foreseeable future.

However, at some point, the Grand Old Party (GOP) administration must demonstrate that it will live up to its lofty campaign promises. Although Trump has signed a myriad of executive orders directed at reforming trade, immigration and financial regulation, actually creating meaningful policy changes will probably be easier said than done.

Treasury Secretary Steven Mnuchin recently told the FOX Business Network that investors shouldn’t expect Trump’s policies to have much of an impact on the economy this year.[2]  The secretary’s comments indicate that the new administration will require more time to navigate bureaucratic and regulatory hurdles. At the same time, Mnuchin has laid out an aggressive timeline for achieving tax reform – one of Trump’s central campaign promises.