Why Trump, Biden may need to fear bond vigilantes
Whether it's President Biden, former President Trump, or someone else, the person occupying the White House in 2025 may have to worry about bond vigilantes. Bond vigilantes are traders that will use, or threaten to use, the bond market to protest the government's spending or its inaction on the deficit. They can sell their bonds, forcing the interest rate to rise and making it more expensive for the bond issuer to borrow. With the US deficit on the rise, whoever wins in November may have to worry about investors attempting to force the government to do something about it. Wells Fargo Investment Institute Global Fixed Income Strategist Luis Alvarado explains that given "the amount of outstanding debt, the amount of deficit that is projected... it can pretty much tell you that there is going to be some sort of reaction from bonds." For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Stephanie Mikulich.