Lost in the post-election stock market euphoria is the fact that the bond market has suffered a dramatic wave of selling that is rare in recent history.
It’s sent interest rates on U.S. bonds spiking, making it more expensive for the federal government to borrow money.
The rate on 10-year Treasury notes has surged to 2.3%, from 1.77% before the election. Last week’s spike in Treasury rates was so big, that it had only happened three times before in the last decade.
BlackRock’s Russ Koesterich called it a “violent reaction.”
The move stands to have broad repercussions for all Americans. Not only will the U.S. government have to pay more to borrow money, but mortgage rates and car loan costs should also rise. That’s because Treasuries are used as the benchmark for many other forms of credit.
The bond market’s reaction shows investors believe Trump’s plans will add to America’s already-massive debt load and cause inflation to rise.