Fiscal Excesses& Bond Volatility

Would a Republican sweep in November boost the federal deficit? The Republicans would certainly extend Trump’s 2017 tax cuts beyond 2025. But they might also rein in federal government outlays. In any case, the initial reaction of the bond market to Trump’s dodging the bullet on Saturday was a slight disinversion of the yield curve, perhaps in anticipation of wider deficits. … Eric reviews the 60/40 portfolio rule and how unrestrained government spending and deficits can impact financial markets. … While the federal budget deficit shrank during the first nine months of this fiscal year, the Treasury still has plenty of securities to sell investors. … Eric also reviews the Sahm Rule.