This week in Bidenomics: Bond market blues

, far beyond forecasters’ expectations. For months, economists have been expecting a slowdown in hiring, and maybe even a recession, since that’s what normally happens when the Federal Reserve hikes interest rates, as it has been doing, to combat inflation.Something feels wrong, all the same. Inflation has come down, from a peak of 9% in June of 2022, to a more manageable 3.7%. That’s obviously good, but consumers are still feeling shocked by price hikes of the last two years.

FILE - Traders work on the New York Stock Exchange floor in New York City, on Tuesday, Sept. 5, 2023. Treasury yields surged in September and sapped the energy from a strong stock market as investors came to terms with the likelihood that interest rates will remain high well into 2024. The yield on the 10-year Treasury jumped to the highest level in nearly two decades.

S&P Global IQ downgraded the US credit rating for the first time ever in 2011. Fitch downgraded the United States in August of this year, andif there’s more fiscal chicanery. And there almost certainly will be more fiscal chicanery now that Republicans have fired House Speaker Kevin McCarthy, making a government shutdown in December more likely and basically halting all budget planning until who knows when.

A three-month surge in interest rates doesn’t automatically doom Biden’s reelection effort. Some economists think rates should ease as inflation continues to decline and the Fed definitively signals it’s done boosting short-term rates. The Fed could even start cutting rates again if a recession blows in. But a bumptious bond market in 2023 could hint at further pain facing some president before long, be it Biden or otherwise.

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