The recent back-up in long-term Treasury yields, reflecting concerns that inflation isn’t coming down fast enough to prompt the Fed to cut rates in the near future, raises the question of how much worse things might get for bonds if Donald Trump is re-elected later this year. After all, they endured a big sell-off in the early stages of Trump’s first term in office amid worries about the inflationary implications of his agenda. (See Chart 1.) We think something similar could happen again if he got back into the Oval Office. But for a different reason this time around. For more on what a Trump 2.0 presidency might mean for bonds, as well as equities and the dollar, see our latest Global Markets Focus published today.
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