2024-02-26 11:19:00
© Reuters
Investing.com – Former US President Donald Trump won the Republican Party primary in South Carolina held last Saturday, bringing closer the possibility of his party declaring him its official candidate for the presidential election. next month of November.
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Experts once once more present their options regarding the possibility of Trump winning the elections and becoming president of the United States once more.
“While fixed income will be largely driven by the macroeconomic environment, the US elections certainly have the potential to inject some volatility into the markets. Assuming Trump sticks to the script of his last term, we might expect increased tariffs – with China and Europe apparently in his sights – tax cuts and greater potential for fiscal expansion,” says Orla Garvey, senior manager of fixed income portfolios from Federated Hermes (EPA:) Limited.
“A Trump presidency would be more impactful if Republicans were to win outright in the House and Senate, and in this scenario we would see the risk of higher fiscal spending,” Garvey adds.
“In the current environment of large deficits that need to be financed, this would probably mean that investors would demand more term premium to support US debt, that is, steeper curves,” warns this expert.
According to Garvey, “Trump has openly criticized Fed Chairman Jerome Powell and has threatened to replace him when his term ends in 2026; if Powell were replaced by a more ‘dovish’ chairman, this might have implications for Fed expectations. inflation, which until now have remained remarkably well anchored.
“Of course, a Trump presidency would have repercussions on a global scale; in the current volatile geopolitical environment and following Trump’s recent comments regarding NATO, the risk of increased fiscal spending should extend to European countries. This raises the possibility of reform of fiscal rules in the future and would once more point to the need for a higher term premium in public debt markets,” concludes Garvey.
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