The $28 trillion Treasury market, pivotal for U.S. government debt auctions, has become a battleground for investors speculating on potential tax and spending policies of presidential candidates, particularly Trump.
Economists project that Trump's proposed tax cuts and tariffs would increase U.S. Treasury debt by an additional $7.5 trillion over the next decade, far more than his opponents.
With Trump's rising odds in betting markets, many investors are adopting what is known as the 'Trump trade,' anticipating that his policies will lead to inflation and rising interest rates.
David Cervantes, founder of Pinebrook Capital, suggests that if Trump wins, investors should expect to short bonds, indicating a belief that bond values will fall.
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