NEW YORK (Reuters) - It’s back - at least for one day.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 27, 2017. REUTERS/Brendan McDermid

The “reflation,” or “Trumpflation,” trade that drove financial markets after Donald Trump’s surprise U.S. presidential election victory last November made a comeback on Wednesday as the unveiling of Trump’s long-promised tax overhaul revived bets that markets would benefit from both faster economic growth and inflation.

The tax plan announced by Trump and fellow Republican leaders would cut the top tax rate for individuals and cut the corporate rate, but it offered scant details on how to pay for the cuts without dramatically driving up the federal deficit.

Stocks and the dollar gained on hopes that the lower tax rates would spur faster economic growth, while bond yields soared on concerns tied to inflationary pressures stemming from more federal borrowing to finance a bigger government deficit.

The dollar index .DXY hit a one-month high. Wall Street share prices .DJI.SPX.IXIC moved closer to their all-time peaks, and the benchmark 10-year Treasury yield US10YT=RR rose to its highest level since early August.

“You are seeing some optimism coming back into play” in the wake of the tax proposal, said Julien Scholnick, portfolio manager at Western Asset Management Co in Pasadena, California.

And Emmanuel Cau, executive director of global equity strategy at JP Morgan & Co in London, said the reflation trade was back.

“Clearly there’s a sensation that the reflation trade is coming back on the agenda,” Cau said. “Most of our positioning is based on a reflation trade happening again.”

But the uncertainty clouding the tax proposal’s prospects could result in the reflation trade fading almost as quickly as it reappeared. Democrats, who were not consulted in drafting the proposal, are hostile to it and Republicans are divided over it.

“It’s a very long wish list,” said Kristina Hooper, global market strategist at Invesco in New York. “This will likely be pared down a lot before it comes to fruition.”

MAYBE IT’S THE FED

Wall Street’s major indexes pared initial gains on Wednesday when traders saw few specifics on the tax proposal after it was announced.

“We’re not holding our breath on today’s tax plan...prompting markets to seriously reprice U.S. reflation prospects,” said Viraj Patel, ING currency strategist in London.

In addition, there were suggestions that Wednesday’s market trends were as much a result of other factors.

Some investors said hints by Federal Reserve Chair Janet Yellen on Tuesday of further interest rate increases - even as inflation has been stuck below the Fed’s 2 percent goal - were at least as responsible as the tax proposal for driving up the dollar and U.S. bond yields.

“Yellen gave a speech that was more hawkish than they had expected. They didn’t want to get behind the curve,” said Scholnick of Western Asset Management.

While the dollar, bond yields and stock prices may press higher in the short run, that trend may end up simply being a reversal of positions tied to excess pessimism about the economy, analysts said.

That said, infrastructure spending and the loosening of regulations, particularly on banking, were the two other drivers of the reflation trade, Scholnick said, noting: “They have been pushed much further out into the future.”