Will Donald Trump face same fate as ex-British PM Liz Truss? Spiking US bond yields risk a situation similar to one that ousted her in 2022, Apollo chief economist says
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According to Business Insider, the 10 year US Treasury yield has surged to nearly 4.70% which is its highest level since the month of April of the year 2024 while causing severe concerns about the market stability. Adding onto that, Torsten Slok actually highlights an unusual phenomenon where bond yields are rising as the Federal Reserve cuts rates while suggesting severely underlying economic tensions.
The proposed combined spending and tax cut bill of US President- elect Donald Trump could actually dramatically increase the deficit spending while potentially sparking a bond market rebellion, asserted Business Insider. At the same time, the market is already grappling with quantitative tightening unsustainable fiscal deficits and high Treasury issuances.
Torsten Slok gradually assigns a 40% probability of the Federal Reserve raising interest rates in the year 2025, which would be actually a shocking development for investors expecting rate cuts. During such times, this potential move could severely impact stock markets specifically tech stocks with high valuations, noted Business Insider.
The ongoing situation actually echoes the market crisis of UK in the year 2022 under Liz Truss where aggressive fiscal plans triggered significant market upheaval.
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