Newly elected U.S. President Donald Trump will face fiscal challenges that could threaten the country’s standing in the global debt markets, hurting investor appetite for the nation’s debt securities, and pushing government borrowing costs higher.
U.S. budget deficits and government debt levels were largely projected to surge under either candidate in the Nov. 5 election, according to several estimates, although Democrat Kamala Harris was expected to add less debt than Trump.
The prospect of rising government debt levels as Trump’s odds improved in recent weeks helped send U.S. government bond yields higher, as many believe his trade and tax policies will reignite inflation and worsen the U.S. fiscal picture. On Wednesday, as results showed Trump winning the election, yields jumped higher with some citing bond vigilantes, referring to investors dumping government debt over worries about rising deficits. The benchmark 10-year…
