Bond Market Warns of Fiscal Crisis as Trump Returns

As evidence keeps building that the hapless Biden administration couldn’t end fast enough, there’s also evidence that the first Trump presidency of strong growth and low inflation pre-COVID won’t ­return immediately.

For my money, the bond markets provide a more accurate window into underlying fissures that could lead to severe fiscal distress in the future. And that’s just one example of bonds exposing a problem well before the rest of the financial world had a clue.The best gauge of this is the price of the 10-year bond the Treasury issues to finance much of the federal debt. Smart traders follow it for signs of economic distress because consumer rates — such as mort­gages — are priced off of its interest rate, or “yield.

Ditto for his deportation of undocumented aliens, since that will reduce the supply of people looking to work on the cheap. Astounding, since the economy is growing and tax receipts should be strong enough to push deficits lower.The budget deficit — which fuels the debt binge — is rising to close to $2 trillion in the coming year.Larry McDonald, a former Lehman Brothers bond trader and author of the influential Bear Traps Report, lays out in chilling detail Biden’s going-away “gift” to Trump.

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