The $28 trillion Treasury market is arguably the most foundational financial market in the world. It’s where the U.S. government auctions its debt to investors who buy and trade that debt, influencing borrowing costs across the globe.
His policies have drawn higher estimates of government debt from economists. One nonpartisan group, for instance, has projected that Trump’s platform would lead to an additional $7.5 trillion in U.S. Treasury debt issuance over a decade — more than twice its estimate for Harris’ policies. But betting markets aren’t predictive of outcomes. And it is hard to disentangle this explanation for the move in Treasury yields from other influences on interest rates: growth expectations, the latest inflation numbers, the inflation outlook, market expectations about Federal Reserve policy, Fed officials’ own data-dependent policy projections and more.
Along with an ambitious set of tax cuts, Trump has repeatedly affirmed his promises to greatly raise tariffs. Many expect that such jacked-up import taxes, when combined with higher deficits, will reignite inflation that the Fed has only recently appeared to tame. If inflation expectations — which influence the behavior of key bond investors — manage to stay anchored, even with higher tariffs and deficits, the hefty uptick in debt expected in late 2025 may not matter as much as feared.