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Fiscal Implications of Trump Presidency Remain Unclear

December 6, 2016

As the shock of the Trump election wears off, markets and policy makers are turning their attention to the future and trying to determine what policies a Trump administration is likely to pursue. One thing that has garnered much attention is Trump’s intention to dramatically increase infrastructure spending. While this is the sort of investment that generally attracts support from across the political spectrum, coupling such spending with Trump’s proposed tax cuts is making fiscal conservatives nervous about the potential for an exploding deficit. With yields on the 10 Year Treasury up almost 30% since the election, there can be little doubt that market participants throughout the world are watching carefully and will demand an increased yield if we appear poised for an era of debt fueled spending.

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