Baig says that the medium-term challenges of high fiscal debt and inflationary risks around tariffs and tightened immigration, will need to be dealt with during this presidential term. “If the president chooses not to do so, the bond market may well force his hand,” he says.
A clash between the US Federal Reserve and Donald Trump may ensue if inflation rebounds from the former US President’s fiscal policy ideas, a scenario which DBS Group Research is “quite concerned about”, according to its chief economist Taimur Baig in a Nov 6 note.
In this case, it may cause consternation among investors, he notes. The US came into elections in a “cyclical sweet spot”, with growth well over 2% and inflation well below 3%, a scenario of comfort which would have lasted regardless of the election outcome.
