Steven Mnuchin, the Treasury secretary, said that stock prices had shot up by 30 percent since the election of President Donald Trump. During the previous State of the Union Address, President Donald Trump reiterated that his administration had seen to it that U.S. stock markets are appreciating in value. He also added that Americans were receiving higher retirement benefits in their savings accounts. On Twitter, Trump speculated that stocks would surge even higher once the tax cut worth $1.5 trillion is fully appreciated.
Mark Doms, an economist based at Nomura Securities, highlights that not only are market stocks facing potential risks, but also bond prices are falling and interests rising. Central banks and the Federal Reserve are having higher pricing of loans. The steep interest rates make borrowing expensive, both for the government and citizens.
President Bill Clinton’s former aide, James Carville, stated that bond markets have powers to dictate budget policies of the White House. Carville’s statement was made way back in the 1990s and touched profoundly on government spending. Economic news is awash with unpleasant financial challenges being faced by Americans. Apparently, the average hourly wage has risen by 2.9% over a period of twelve months. This sudden rise has not been seen for over eight years and is currently the fastest. Increased wage growth also poses a risk of inflation thus leading to higher loan rates.
When interviewed by The Associated Press, last year, Trump admitted that trade-offs might be occurring as a result of strictly linking financial markets with his presidency.