Donald Trump’s second-term policies are seen by investors as posing potential threats to the fight on inflation.
by Diccon Hyatt
Investopedia
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President-elect Donald Trump won his second term in office Tuesday after promising to fight the inflation that has hammered household budgets since 2021—however, financial markets are betting he’ll make it worse instead.
Yields on 10-year Treasurys surged Wednesday in the wake of Trump’s victory, rising as high as 4.47%, their highest level since July. Treasury yields tend to be heavily influenced by investor concerns about inflation, with higher yields signaling concerns about greater inflation risks ahead. Economists widely believe several of Trump’s policy proposals—especially his tariffs on imports—could accelerate the rising cost of living.
“We expect tariffs and tax policy will be the focus for economic policy early in a second Trump administration,” David Seif, chief economist for developed markets at Nomura, wrote in a commentary. “Tariffs are likely to be inflationary and negative for growth.”