Posted on 07/05/2024 8:13:27 PM PDT by SeekAndFind
The increasing likelihood of a second Trump administration has helped spark a selloff in U.S. government bonds, with investors betting policies including tax cuts could drive up deficits and inflation.
Treasury yields, which rise when bond prices fall, started surging June 28, a day after a debate between President Biden and former President Donald Trump that Wall Street viewed as delivering a major blow to Biden’s re-election chances. A poor showing from Biden could also help tip control of Congress to Republicans, creating more space for their budget priorities.
“Something obviously changed pretty quickly on Friday,” said Dan Mulholland, head of rates trading and sales at Crews & Associates. Investors, he said, are assessing “how we’re going to move forward after the Thursday debate, and I think there have been some pretty big bets that have been placed.”
A rule of thumb on Wall Street holds that budget deficits tend to be larger under one-party control. Many investors think that elevated deficits have already played a role in driving up Treasury yields in recent years by increasing the supply of bonds that the market must absorb and putting upward pressure on inflation—prompting the Federal Reserve to set interest rates higher than they would have done otherwise.
As a candidate this year, Trump has made broad promises about cutting taxes. He has also said he would impose sweeping tariffs, which analysts say could have an uncertain economic impact, potentially adding to inflation but also raising revenue and slowing economic growth.
Investors, though, have focused mostly on how large pieces of a 2017 tax law are scheduled to lapse after the end of next year. Many expect a Republican-controlled Congress and White House would extend all of them, reducing projected revenue by nearly $4 trillion over the next decade.
(Excerpt) Read more at wsj.com ...
There is a point on the Laffer curve where reducing rates decreases revenue. However, taxes have never been reduced so much to find that point.
And despite the tax rates, the Fed revenue is between 15 to 20% of the GDP.
To raise revenue, the government needs to figure out how to maximize GDP growth.
With our massive debt and deficits they are not.
When we get to or past the inflection point then revenues will decrease YoY. Hasn’t happened. Probably will never happen.
Spending has nothing to do with revenue. Cutting spending does not affect revenue and vice versa. Anyone that is married knows this.
Cutting spending just means there is more to spend on the next shiny thing that catches their eye.
Reducing the debt is what is critical. Soon, the interest on the debt will be the ONLY thing the government can afford.
...just a little more to get them to the grave.
...then, BOOM (reality)!
(who cares, bye suckers, LOL!).
We could raise revenues by taxing all of those illegals working under the table. And we could collect a bunch of social security taxes from them as well.
It’s not that ALL of those Immigrants are horrible people. It’s that they are reaping the benefits of the country without paying “their fair share.”
THATs what our immigration discussion needs to include.
“Spending has nothing to do with revenue. Cutting spending does not affect revenue and vice versa. Anyone that is married knows this.”
Nonsense. Cutting spending reduces how much revenue you are looking for, which reduces how much government tax pain you want to inflict on the economy, which means with big spending cuts you could reduce the tax rates, which which would reduce costs of businesses, which would make them more productive, which can increase expeceted tax revenue. EVERYONE knows that.
Thanks for sharing.
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