Former US President Donald Trump arrives during a “Get Out The Vote” rally in Greensboro, North Carolina, US, on Saturday, March 2, 2024.
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Donald Trump’s U.S. election victory has ratcheted up concerns about higher prices, prompting strategists to rethink the outlook for global bond yields and currencies.
It is widely thought that the president-elect’s pledge to introduce tax cuts and steep tariffs could boost economic growth — but widen the fiscal deficit and refuel inflation.
Trump’s return to the White House is seen as likely to throw a wrench in the Federal Reserve‘s rate-cutting cycle, potentially keeping an upward bias on Treasury yields. Bond yields tend to rise when market participants expect higher prices or a growing budget deficit.
Alim Remtulla, chief foreign exchange strategist at EFG International, said it would be “untenable” for the Fed to continue with its easing plans while yields rise.
“Eventually, either the Fed has to pause …