Many Americans are frustrated with high consumer prices and elevated mortgage rates, discontent that could help Donald Trump win back the White House, if betting markets are to be believed. Sadly, markets also imply that he’ll ultimately make the cost-of-living crisis worse.
While the election outcome is still far from clear, mortgage and bond markets are beginning to price in the rising probability that Trump will prevail on Nov. 5 and enact inflationary tariff and immigration policies. He may even weaken the Federal Reserve, the nation’s inflation-fighting central bank. The average 30-year mortgage rate has climbed by 45 basis points in the past month to 7.09%, the highest since July, according to a Bankrate.com index. Yields on 10-year Treasury notes have climbed by 49 basis points to 4.24%, and market-based measures of expected inflation are rebounding. In fairness, politics alone aren’t responsible for these moves, but they’re clearly part of the story.