Trumponomics Does the Bond Market Have It In for Donald Trump?
Jan 15, 2025
Anna Wong, Chief US Economist at Bloomberg Economics and former Fed and Trump White House insider, unpacks the bond market's impact on Trump's agenda. She discusses how rising bond yields may challenge economic expectations and deficit spending. Wong also explores the complex policymaking dynamics within the Trump administration and its fraught relationship with the Federal Reserve. Additionally, the conversation touches on the global repercussions of U.S. borrowing costs, illustrating the interconnectedness of today's financial systems.
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Rising Bond Yields and Trump Administration
- The bond market sell-off and rising yields are key concerns for the incoming Trump administration.
- Several explanations exist, including the Fed's reduced rate cuts, fiscal sustainability concerns, and Trump's potential inflationary policies.
Market Reassessment and Bond Yields
- Markets reassessed the expectation of Fed rate cuts due to better economic growth prospects.
- This and an increase in real rates contributed to rising bond yields, impacting Trump's potential policies.
Congressional Concerns Over Bond Yields
- Rising bond yields worry some members of Congress about increased deficit spending.
- Republican control over the House, Senate, and White House allows for significant action, but slim majorities could hinder progress.