The so-called TACO trade — short for “Trump Always Chickens Out” — has become a cynical staple of the 2026 market, but while equity traders use it to buy the dip, the real damage is being done in the basement of the global economy: the bond market.
According to many who cover the beltway, President Donald Trump’s primary goal for 2026 is solving the affordability crisis, specifically by attempting to force mortgage rates lower. However, the constant drama and policy reversals inherent in the TACO trade are producing the exact opposite result. By injecting extreme uncertainty into the fiscal outlook, the administration is pushing domestic and foreign investors away from U.S. long bonds, sending yields higher and making the job of fixing housing affordability nearly impossible.
