Yahoo Finance

How bond markets would react to a Donald Trump presidency | Future Focus

On this week's episode of Yahoo Finance Future Focus, our host Brian McGleenon spoke to Charles Stanley Direct chief analyst Rob Morgan about whether investors should pivot from fixed-income investments to equities in light of Donald Trump’s election victory and the anticipated policy shifts that could impact growth and inflation. Morgan emphasised the significant volatility in bond markets following Trump’s election win on 5 November, ahead of his inauguration on 20 January 2025. He explained that market reactions have been shaped by expectations of higher fiscal spending, tariffs, and potential inflationary pressures — factors that traditionally weigh negatively on bonds. However, he also cautioned that much of this expected turbulence may already be priced into the market. Despite the volatility, Morgan argued for the enduring value of fixed income, especially for income-focused or cautious investors. With government bond yields hovering around 4.5%, he noted they now offer an attractive compensation for inflationary risks. Additionally, he highlighted that if inflation doesn’t surge as anticipated, bonds could provide both stable income and potential capital appreciation.