Notwithstanding the ongoing changes in the White House dispute, Franklin Templeton has already studied the impact of the Trump camp's sweeping of Congress and the White House on bonds. Stephen Dover, Chief Market Analyst and Head of Franklin Templeton Research Institute, said that there are no explicit plans to reduce government spending, let alone increase taxes, in the Republican Party's platform or public statements regarding fiscal policy. However, this does not necessarily mean that loose fiscal policy will inevitably lead to an increase in US bond yields. If inflation continues to decline and the US economy slows down due to the lagging effects of the Federal Reserve's tightening policy, bond yields may fall even if the US federal government does nothing to address the huge budget deficit.
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Franklin D. Roosevelt: Even under loose fiscal policy, US bond yields could still fall
Notwithstanding the ongoing changes in the White House dispute, Franklin Templeton has already studied the impact of the Trump camp's sweeping of Congress and the White House on bonds. Stephen Dover, Chief Market Analyst and Head of Franklin Templeton Research Institute, said that there are no explicit plans to reduce government spending, let alone increase taxes, in the Republican Party's platform or public statements regarding fiscal policy. However, this does not necessarily mean that loose fiscal policy will inevitably lead to an increase in US bond yields. If inflation continues to decline and the US economy slows down due to the lagging effects of the Federal Reserve's tightening policy, bond yields may fall even if the US federal government does nothing to address the huge budget deficit.