The $28 trillion Treasury market is arguably the most foundational financial market in the world. It’s where the U.S. government auctions its debt to investors who buy and trade that debt, influencing borrowing costs across the globe.
It has also become one of the main places for investors to express their views on the race for the White House.
Vice President Kamala Harris and former President Donald J. Trump have each pledged tax and spending policies that would most likely increase federal deficits, leading to more government borrowing.
But it is Mr. Trump’s proposals — including steep tariffs and extra-large tax cuts — that investors have become focused on, especially as his odds of winning have risen in some betting markets.
His policies have drawn higher estimates of government debt from economists. One nonpartisan group, for instance, has projected that Mr. Trump’s platform would lead to an additional $7.5 trillion in U.S. Treasury debt issuance over a decade — more than twice its estimate for Ms. Harris’s policies.
“Trump wins, you short bonds” — bet that their value will fall and yields will rise further — and “lever up” on stocks, said David Cervantes, the founder of Pinebrook Capital, an asset management firm. He is a believer in what has come to be called the “Trump trade” in finance: a bet that Mr. Trump’s assuming power would boost inflation and interest rates but might also juice corporate earnings in the near term.