His policies – if he were to do what he says he will and is left unchecked by having control of both chambers of Congress – would greatly increase America’s deficits and debt and be highly inflationary. (They’d also be highly regressive, but that isn’t a central concern for bond investors.)
Moreover, they would probably cause the US economy to grow more slowly, or even shrink, relative to the current settings.
Bond investors are, sensibly, asking to be better compensated for the risks.
They’d be inflationary and contractionary because the cost of his tariffs would be passed on to US companies and then consumers.
The loss of millions of immigrants would shrink the pool of labour, causing either higher wages for the remaining workers and/or reduced economic activity and higher prices because of the reduced availability of low-cost workers.
They’d also result, as occurred during Trump’s previous term as president, in a huge…
