Trump's victory will cause a sharp rise in US bond yields - Reuters
Kyiv • UNN
Trump's potential victory could cause a sharp rise in US bond yields due to his policies on taxes, immigration, and trade tariffs, which could lead to higher inflation and economic tensions.
Donald Trump's policies on taxes and immigration may cause tension in the American labor market and the economy as a whole. UNN writes with reference to Reuters.
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According to Reuters, Trump has gained a significant advantage over President Joe Biden in the fight for the White House after the debate between the two candidates on June 27.
Following the debate, the yield on ten-year US Treasury bonds hit a three-week high, rising by almost 4.5%. According to some analysts, this indicates that market expectations for Trump's victory are growing.
"What's true about Donald Trump, his program, is that it's largely inflationary. Even if conditions are favorable in fixed income... the long end of the US yield curve is less favorable in our view because of the political risk reward in the US," said Benjamin Melman, chief investment officer at Edmond de Rothschild Asset Management.
Trump has announced his intention to impose high duties on imports of foreign goods, in particular, by raising duties to 60% on goods from China entering the United States. This could lead to higher prices for American consumers and trigger inflation. In addition, Trump plans to initiate the largest deportation program in US history, aimed mainly at criminals, but which will also affect millions of other people who are to be sent back to their home countries.
"When the chances of Trump's election suddenly increased, the pricing of risk by the markets was immediate," Jacques Aurélien Marsiro, co-head of equities at Edmond de Rothschild, said at a press conference.
Recently, Edmond de Rothschild has become more cautious about European assets until the political situation in France becomes more stable. Their positions in the bond market include carry trade strategies, which profit from the difference in rates between asset values, as well as corporate and financial hybrid debt, which have characteristics of both stocks and bonds.
Recall
The head of a conservative research institute believes that the United States is in the midst of a "second American revolution", but added that Republicans are "in the process of taking back the country.