Bond yields could see a big pop in the event of a Trump win as more tax cuts and steep tariffs could widen the fiscal deficit and reignite inflation.
A specialist trader works inside a post on the floor at the New York Stock Exchange on Oct. 23, 2024.Treasury yields rose in early trading Tuesday evening as investors awaited results from the tight presidential race between Vice President Kamala Harris and former President Donald Trump .was also up by 10 basis points to 4.30%. One basis point is equivalent to 0.01%. Yields and prices have an inverted relationship.
Even though none of the major swing states were called yet by NBC News, traders speculated the early returns were favoring the former president.in the event of a Trump win, and they could surge in a Republican sweep, where the party captures control of Congress and the White House.
Neither Trump nor Harris really promised fiscal discipline on the campaign trail, raising worries that investors will demand higher yields in exchange for holding Treasuries as the government is forced to issue more and more debt to fund its ballooning spending. The yield can be expected to approach 4.5% in the event of a Trump win, or fall toward 4% under a Harris victory, according to Stephanie Roth, chief economist at Wolfe Research."I think a split Congress, whoever wins the presidency, is probably the favorite for the markets, so that neither candidate can get his or her full plan pushed through," Siegel said.
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