U.S. Treasury bonds were once considered one of the safest places to park money. But with President Donald Trump’s current administration, investors are watching bond markets more closely than usual.
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If you’re holding bonds or considering adding them to your portfolio, Trump’s second term could influence your returns in ways you might not expect.
Chris Cantrell, investing expert and vice president of securities at Thoroughbred Financial, broke down four key areas where Trump’s policies could directly impact your bond investments this year.
Tariff Volatility
Trump’s tariff strategy has created a turbulent environment for bonds, particularly long-term Treasuries. The recent threats against European Union allies and geopolitical maneuvering around Greenland have already sent shockwaves through the market.
“We have seen the back-and-forth yo-yoing of tariffs have a significant impact on the equity markets throughout the last year,” Cantrell said. “The most recent tariff threat on our EU allies and the geopolitical tactics involving Greenland have already triggered a sell-off of U.S. bonds, causing the 30-year Treasury yield to take a massive jump.”
This spike in yields means bond prices are dropping, which can be bad news if you’re holding long-term Treasuries. If tariff tensions continue escalating, Cantrell warned, “We may see a continued increase in the 30-year yield, working against Trump’s goals of lowering interest rates and borrowing costs.”
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Mortgage-Backed Security Purchases
Trump may bypass the Federal Reserve entirely by using quantitative easing through mortgage-backed security (MBS) purchases to drive rates down on his own terms.
“Trump could influence the bond market with further quantitative easing through mortgage-backed security purchases,” Cantrell said. “If his first round works in the way he intends, I suspect that we will see more rounds of purchases to try to coerce rates without Fed cooperation.” Cantrell called this open market coercion of rates.
Growing Deficits
Trump’s tax and spending policies are projected to add approximately $4.1 trillion to the national debt over the next decade. That growing debt means the government will need to attract more bond investors, likely by offering higher yields.
Cantrell noted that, “As the deficit continues to rise, the U.S. government will need more investors in the U.S. bonds. This has the potential to drive rates up in an effort to pull investors away from the equity markets.”
Geopolitical Instability
Trump’s aggressive foreign policy, including threats to take over Greenland, pressure on NATO and EU allies and more, is creating uncertainty among international bondholders.
“EU allies started to sell off U.S. Treasuries due to his stance and approach to Greenland,” Cantrell warned. “This additional geopolitical tension could cause other foreign investors to hesitate when it comes to holding U.S. debt. Weakening demand from foreign investors has the potential to further exacerbate the rate issue in an effort to provide compensation for the additional risk.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m an Investing Expert: Here’s How Trump Could Shake Up Your Bonds in 2026
