Regardless, whether we get Trump’s tax cuts and higher spending or Clinton’s tax increases and higher spending, they each will require fairly substantial issuance of Treasuries. And as we have noted previously, there is a significant shortage of a triple A rated sovereign paper.
Both candidates support the repatriation of $2 trillion in overseas corporate profits (Clinton, here, Trump, here), with some significant variations.
What might the impact of this be for fixed income portfolios?
There are so many possible variations that it is foolish to pretend we can assess this with any degree of confidence. The cooperation of Congress -- you know, that branch of the government that controls the purse strings -- will be crucial to any substantial changes to financing federal debt. But in the broadest strokes possible, regardless of who wins in November, you should expect to see spending, and possibly deficits, going up.
Perhaps even enough to make a dent in that shortage of triple A rated sovereign paper.