Why lowering the yield on 10-year bonds is more important to Trump than the stock market or interest rates

• The Trump administration spoke a lot About the return on the treasury for a period of 10 years, and the price standard for mortgages and other types of joint loans, as the president pledges to reduce borrowing costs for Americans. The data indicates that more living families are more subjected to interest rates than fluctuations in the stock market, but the impact of definitions on inflation may eventually be the most influential economic issue for voters.

Donald Trump loved to boast about the stock market at the beginning of his first period of work in the Oval Office. But with the decrease in stock prices amid his threats to customs tariffs, the President indicated that he no longer used the S&P 500, which was closed in the correction area on Thursday after the index decreased by 10 % of the highest level in mid -February, when he was yard during his second term.

Instead, the new administration, including Treasury Secretary, Scott Pesint, was more hustle around the bond market and Trump pledged to reduce borrowing costs for Americans. Pesin said that the president’s focus on seeing a decrease in the return on the treasury note for a period of 10 years, the rate of prices in the mortgage market of $ 12.6 trillion, many corporate bonds, and government interest payments.

“We are focusing on the real economy. Can we create an environment where there are long -term gains on the market and long -term gains for the American people?” Pesin said CNBC Thursday. “I am not worried about few fluctuations for three weeks.”

Regardless of Trump’s real feelings, the data indicates that Americans are more likely to change interest rates than fluctuations in the stock market. While about six out of 10 Americans report shares, according to the 20123 Gallup poll, approximately 80 % of American families have a type of debt, according to the Federal Reserve. The return has decreased for 10 years, nearly 50 basis points since the week before the inauguration of Trump, although it reached 4.30 % on Friday morning.

“A greater number of voters are affected by the interest rates than the S&P,” said Bradley Tusk, political investor Bradley Tusk. luck. “But inflation dwarfs each.”

It is clear that the markets are not admirer by the uncertainty in the customs tariff, although the stocks bounced slightly on Friday morning. It remains to see whether protective measures will lead to slower growth, higher prices, or both (worse scenario), or not. Although many Americans have seen the value of 401K and other retirement plans in recent weeks, there are signs that the return has already has an effect.

Real estate mortgage rates decreased for a month and a half before Freddy Mac’s weekly estimate increased slightly higher on Thursday, although the agency said that the average mortgage rate for 30 years decreased to 6.65 % after exceeding a 7 % threshold in early January.

“Despite this simple rise, prices are still at its lowest levels of the year, and if it continues to decline, it may provide a welcome boost with the start of the housing market in the spring,” wrote Lisa Stortavant, the chief economist in the multiple listing service.

It may not address the decrease in mortgage payments the deficit in structural housing in the country, but they can urged homeowners who felt “detained” at the prices they obtained before the decrease in borrowing costs in 2022. The volume of a mortgage loan demand increased by 11 % last week, according to an indicated index by the Mortgage Banking Association.

Why is Trump aspiring to the cabinet for 10 years?

Long -term yield is closely related to the federal reserve lending rate overnight, allowing the decisions of the central bank to be transferred throughout the economy. However, the relationship is not perfect, because the market for free floating assets like a 10 -year cabinet also depends on other factors, as Matt Sheridan, the leading portfolio of the income strategies in Alliascebernstein. He said that the expectations of economic growth, inflation and financial policy also play a role.

The returns, which represent the annual return on the investor, decrease with the high prices of bonds – and vice versa. This tends to occur if investors believe that the Federal Reserve will have to reduce prices, making higher payments on current bonds more attractive to new debts.

On the contrary, if the anxiety over the debt burden of the government increases, investors may ask for a higher return. During the past few months, Sheridan said that fixed -income investors are less than the federal deficit and are now more concerned about the economy. Initially, many merchants believe that Trump will focus on the pro -growth aspects of its agenda such as tax cuts and the abolition of restrictions.

“I think the investors were somewhat surprised because the new administration gives priority to definitions,” he said.

A White House spokesman said that the simple gathering in the bond market reflects the efforts of the new administration to restore “financial stability and trust.”

“President Trump has committed to restoring the credibility of our financial nation, which is undermined by the reckless spending of the previous administration,” Harrison Fields, Deputy Secretary of the Press and Private Assistant to the President.

It is wrong to suggest that Trump was not ready to consider the fluctuations of previous stocks during his first term. After all, although the president indicates the performance of the stock market almost once every 35 hours throughout January 2018 PoliticoS&P 500 eventually decreased by 6 % that year as Trump launched a first trade war with China.

“President Trump feeds on stock prices when they rise, and it is not when he decreases.”

It seems that some of the population composition that tends to low exposure to the stock market is attracted to Trump, which Harris and his performance of 2020 excelled in November between voters without obtaining a university degree and those who get less than $ 100,000.

They may not care about the stock market, but they are [also may not be] Task, who served as director of the former New York City mayor, Michael Bloomberg, said on the market to buy a new house.

He added, “But what they do is buy groceries,” or they may want to buy a new truck. “

He said that automatic loans are aside, and for this reason inflation and potential prices increase from customs tariffs, they are the economic issues that are looming on the horizon.

Correction: This story was corrected to reflect that the report from Politico found that President Donald Trump boasted almost once every 35 hours during January 2018.

This story was originally shown on Fortune.com

2025-03-14 16:28:00