Could the Bond Market Stymie Trump’s Economic Plans?

Published On Nov 9, 2024, 8:00 AM

The article discusses concerns regarding how Donald Trump's economic policies could affect federal deficits and inflation, particularly if his plans include increasing tariffs, extending corporate tax cuts, and providing additional tax breaks. Analysts worry that these policies could provoke behavior from bond investors, leading to higher yields on Treasury bonds, which would increase government borrowing costs. The notion of 'bond vigilantes' is highlighted, suggesting that investors may react negatively if they perceive excessive government spending resulting from Trump's agenda.

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Stock Forecasts

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If Trump's policies lead to increased federal borrowing and rising inflation fears, bond prices are likely to drop, leading to higher yields. This shift may adversely affect Treasury bond holders and could also signal a slowing economy due to increased costs of borrowing. Consider investing in inversely correlated assets or ETFs that benefit from rising interest rates.

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