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  • Writer's pictureRealFacts Editorial Team

Bond Market Update

bond market numbers

The benchmark 10-year yield increased by 4.34% following the U.S. presidential debate last month with the increased chance that Trump wins the election and then preceded to decline after new data showed the U.S. labor market is weakening.  Investors continue to be anxious about the future with the many uncertainties that lie ahead depending on the results in November.  The Fed has yet to cut rates and some key indicators showing the economy may be weakening leave many wondering whether the Fed will be able to achieve a soft landing and not drive the economy into a recession.  On the other hand, the economy has shown resilience, and the AI hype has led the stock market to all-time highs.  With the possibility of a new president coming into office many wonder how Trump’s fiscal policy will differ from Biden’s and how it will affect the economy.  

One of the growing concerns of the international community and economists is the effect of rising government debt on the bond market.  The rising debt burden of many governments can cause the cost of debt to increase for all as companies and the government fight for investor’s dollars.  This is especially prevalent in the U.S. as the fiscal deficit has risen to unprecedent highs over the last decade.  Mike Cudzil, the managing director and generalist portfolio manager at PIMCO, said that “Whoever wins the election, regardless if Republican or Democrat, the loser is going to be the deficit.”  

Investors concerns about the growing government debt combined with uncertainty about the current direction of the economy threatens any emerging rally in the U.S. bond market and places investors in hard place to tell what will happen over the next 6 months.


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