Trump attacks private debt to reshape markets

Donald Trump's prospective attacks on private debt actually contrast with his apparent comfort with ascending public indebtedness. If carried out properly, both will have a huge impact on financial as well as asset markets.

Plans considered by Donald Trump as well as Republican leadership will make mortgage and also corporate debt far less appealing to borrowers, thus hitting house as well as share prices. In addition to this, tax cuts and spending plans are going to inflate the public debt and spur economic growth, pushing yields on Treasuries up.

Disadvantaging private debt while soaring public borrowing will have a mutually self-reinforcing impact, as ascending interest rates make borrowing less attractive for households and companies and apply the downward pressure on asset prices.

Like everything Trump offers or considers, it might never take place, and financial markets aren’t certainly trading as if it will.

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