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‘Everybody’s An Economic Populist Now’
I don't want to dwell too much on hypothetical US election outcomes given the myriad factors playing havoc with efforts to discern who's ahead where and with whom in what certainly counts as one of the more extraordinary political cycles the country's ever seen.
That said, the "red sweep" bearish duration trade's starting to get some traction again, and it's worth a quick mention.
A spate of firm -- and in some cases outright hot -- US macro data already has 10-year yields ~40bps higher off th
My working assumption is that Trump -> higher inflation, lower rates, higher deficits, higher risk of disruption/dysfunction.
CRFB seems to agree on the deficit part.
https://www.crfb.org/papers/fiscal-impact-harris-and-trump-campaign-plans
An additional concern in a Trump victory is his stated desire to expand tariffs in a return to the interwar period of extreme protectionism. The replacement of goods previously imported by domestic firms will be slow (depending on capital nature of business) or non existent, both alternatives will have big inflationary impacts. Tie this into his stated desire to expel significant numbers of immigrants ( legal or illegal) and I foresee huge inflation and extraordinary economic contraction. Basically Argentina. Precious metals, canned goods and forgive me ( even I am embarrassed) bitcoin appear to be long investment opportunities.