In the case that Donald Trump defeats Kamala Harris, some see a scenario in which rising fiscal deficits, along with a potential global trade war, could mean higher inflation and surging bond yields.
by Jeff Cox
CNBC.com
The potential that Donald Trump could prevail in the presidential race has contributed to sentiment in financial markets that the firebrand candidate’s policies could stir both economic growth as well as inflation.
In the case that Donald Trump defeats Kamala Harris, some see a scenario in which rising fiscal deficits, along with a potential global trade war, could mean higher inflation and surging bond yields, along with gains in the stock market.
Being that yields and prices move in the opposite direction, that would be bad for underlying fixed income value. Depending on how things trend, there’s even talk about the return of “bond vigilantes” — traders who essentially force the government’s hands by either eschewing government debt or selling it outright.