Mar­ket di­vide

Daily Freeman (Kingston, NY) - - NATION+WORLD -

Fi­nan­cial mar­kets are as di­vided over Don­ald Trump as vot­ers are.

Stock mar­kets love him. Bond mar­kets hate him.

Stocks have mostly been ris­ing be­cause the pres­i­dent-elect plans to slash reg­u­la­tion and busi­ness taxes and spend more, all of which is good for cor­po­rate prof­its. The Dow Jones in­dus­trial av­er­age is up 3 per­cent since Tues­day’s elec­tion.

By con­trast, bond in­vestors have been sell­ing, send­ing yields soar­ing. They ex­pect higher in­fla­tion and higher govern­ment debt as Trump opens the fis­cal spig­ots to get the econ­omy to grow faster, as he has promised. In­fla­tion hurts bonds be­cause it eats away at the value of their fixed in­ter­est pay­ments.

The yield on the 10-year Trea­sury note has risen from 1.75 per­cent just be­fore Trump’s vic­tory to 2.30 per­cent, a big move. Of course, in­vestors could be get­ting a Trump pres­i­dency all wrong and quickly re­verse their re­cent moves. A Repub­li­can Congress might re­ject or at least limit any eco­nomic stim­u­lus that would en­tail large amounts of ad­di­tional spend­ing and bor­row­ing.

Ei­ther way, ex­pect a bumpy ride. When pol­i­tics are in up­heaval, so are mar­kets.

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