- The Trump government spoke a lot About the return of the 10-year Ministry of Finance, the benchmark for mortgage quotas and other common loans because the President promises to reduce the loan costs for Americans. Data indicate that more households are exposed to changes in interest rates than fluctuations in the stock market, but the effects of tariffs on inflation could ultimately be the most economical problem for voters.
Donald Trump loved it brag About the stock exchange at the beginning of his first stay in the Oval Office. But as a share prices Fall In the middle of his temporary threats of tariffs and assembly Fear of recessionThe president stated that he no longer used the S&P 500, which was closed Correction area On Thursday, after the index in mid -February, 10% died as a scale during its second term.
Instead, the new administration, including the Minister of Finance Scott Bessent, was much more loud about the Bond market And Trump’s promise to reduce the credit costs for Americans. Better said Mortgage marketMany corporate bonds and the government’s own interest payments.
“We focus on the real economy. Can we create an environment in which there are long -term market profits and long -term profits for the American people? “Besser told CNBC Thursday. “I’m not worried about a little volatility over three weeks.”
Regardless of Trump’s true feelings, the data indicates that the Americans are exposed to more interest rate changes than fluctuations on the stock exchange. While almost six out of 10 Americans have stocks, it is said after a 2023 Gallup Opinion pollAlmost 80% of American households have any kind of debt, after To the Federal Reserve. The 10-year return has dropped by around 50 basis points since the week before Trump’s inauguration, although it was reached to 4.30% on Friday morning.
“More voters are affected by interest rates than the S&P”, political strategy and risk constronotier Bradley Tusk told Assets. “But the inflation level dwarfs both.”
They are clear markets are not a fan of Collective bargainingAlthough stocks were praised somewhat on Friday morning. It remains to be seen whether more protectionist measures will lead to slower growth, higher prices, both (the worst case scenario) or not. Even how many Americans have probably declined in the past few weeks the value of their 401K and other pension plans, there are signs that the decline in income has already had an impact.
Mortgage interest Fell one and a half months before Freddie Macs weekly treasure It was a bit higher on Thursday, although the agency said that the average interest rate for a 30 -year -old mortgage had dropped to 6.65% after it exceeded the 7% neck in early January.
“Despite these minor bumps, the tariffs are still at the lowest level of the year and could be a welcome thrust when the spring real estate market started,” wrote Lisa Sturtevant, chief economist of the several Listing service Bright MLS, in a note on Thursday.
Lower mortgage payments cannot be attributed to the structure of the country Housing deficitBut they were able to produce homeowners who felt “locked upTo the interest rates they received before the costs for lending costs 2022 have increased. The application volume of the mortgage loan rose by 11%last week, after For a index calculated by the Mortgage Banker’s Association.
Why Trump claims the 10-year-old treasury in mind
The long -term returns correlate strongly with the credit rate of the Federal Reserve for banks, which means that the central bank’s decisions can be transferred throughout the economy. However, the relationship is not perfect, since the market for freely flowing assets such as the 10-year Ministry of Finance is also based on other factors, said Matt Sheridan, senior portfolio manager for income strategies at Alliancebernstein. The expectations of economic growth, inflation and financial policy also play a role, he said.
The yields that represent the annual return of an investor decrease with rising bond prices – and vice versa. This tends to happen when investors believe that the Fed will be forced to reduce interest, which makes the higher payments for existing bonds more attractive compared to new debts.
Conversely, if concerned about the government of the government Debt Investors could request a higher return. In the past few months, according to Sheridan, fixed income investors have worried less about the federal deficit and are now more concerned about the economy. At first, many dealers believed that Trump would concentrate on pro-growth aspects of his agenda such as tax cuts and deregulation.
“I think investors were a bit surprised that the new administration prioritized the tariffs,” he said.
A spokesman for the White House said that the minor rally of the bond market reflected the efforts of the new government to restore “tax stability and trust”.
“President Trump has undertaken to restore the fiscal credibility of our nation, which was undermined by the ruthless expenditure of the previous government,” said Harrison Fields, deputy spokesman and special assistant of the President in a statement.
Marko Papic, chief strategist at BCA Research, said it was wrong to suggest that Trump is not willing to look at the volatility of equity during his first term. Despite the president, who quoted the performance of the stock exchange every 35 hours in his first year and change of office, she quoted every 35 hours. per PoliticalThe S&P 500 decreased by 6% in 2018 when Trump started a first one Trading war With China.
“President Trump tweets about the stock prices when they rise,” said Papic, “and he doesn’t do it when they go under.”
Some demographic features that tend to have Lower exposure Trump also seemed to be entered by the stock exchange, the Harris and his own performance of 2020 in November among voters without a university degree and people defeated fewer than $ 100,000.
“You probably don’t take care of the stock exchange, but you (maybe not) on the market to buy a new house,” said Tusk, who acted as a campaign manager for the former mayor of New York City, Michael Bloomberg.
“But what you do is to buy food,” he added, “or you might want to buy a new truck.”
Apart from car loans, inflation and potential price rise from the tariffs, he said, the economic problems that are greatest.
This story was originally on Fortune.com
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