Trump wins election, reshuffling outlook for US economy. The Republican president-elect’s policy views on a number of macro fronts differ sharply from priorities pursued by the Biden administration, including trade, green energy, taxes and several other key areas. The federal government’s deepening budget deficit, which received little if any attention on the campaign trail, will also be a factor in the year ahead. “It was once unthinkable that the US would have almost three years with an unemployment rate around or well below 4% and yet run budget deficits of 6-8% of GDP,” notes Mohamed El-Erian, president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy. In a possible sign that the bond market will put pressure on the new administration to deal with the deficit, Treasury yields rose to multi-month highs this morning. “We need to watch what happens to bond yields, and there could be a tipping point if US bond yields continue to rise,” says Seema Shah, chief global strategist for Principal Asset Management.
