Bond Market Turmoil Threatens Trump's Economic Agenda
The recent surge in equity markets following Donald Trump's election win contrasts with rising 10-year US Treasury yields, which have reached 4.4% despite the Federal Reserve's rate cuts. This suggests market concerns about medium-term inflation and growth, especially with Trump's proposed tax cuts and tariffs. While credit spreads remain tight, indicating manageable corporate borrowing costs, the sustainability of corporate profits and household income under prolonged high interest rates is uncertain. The potential for rising prices and the Fed's response could impact equity valuations, as seen during Joe Biden's tenure.