Trump Would Be ‘More Disruptive’ for the Bond Market Than Biden, ‘Bond King’ Bill Gross Warns

If Donald Trump is re-elected, budget deficits will grow, and the bond market will suffer more than under another Joe Biden administration, experienced bond investor Bill Gross warned in a recent interview with Financial Times.

Gross admitted that Biden has also presided over an expansion in U.S. debt, with deficits in the economy shooting up to 8.8% of GDP last year from 4.1% in 2022. Nevertheless, Gross, dubbed "Bond King", anticipates more problems from the former president than from the incumbent, per Fortune.

“Trump is the more bearish of the candidates simply because his programs advocate continued tax cuts and more expensive things,” Gross told the FT, explaining his perspective, adding “Trump’s election would be more disruptive.”

Known as the "Bond King," Bill Gross is a well-known bond investor and co-founder of PIMCO, the Pacific Investment Management Company. Gross established the first universally accessible investable market for fixed-income securities, before which, bonds were rarely traded and only through paper documents. The firm provides mutual funds and account services to individual, institutional, and high-net-worth clients.

Gross' statement coincides with Trump's pledge to extend the tax cuts he enacted in 2017, whereas Biden has stated he would allow the cuts to expire but would not allow taxes to increase for Americans earning less than $400,000 a year.

The Treasury Department has released a wave of bonds as long as the nation's deficits stay in the billions. Bond prices have also suffered due to the Federal Reserve's decision to reduce its balance sheet and maintain higher interest rates for longer.

According to CBO projections, the budget deficit in 2024 will be $1.6 trillion. “It’s the deficit that is the culprit; a $2 trillion [annual] increase in supply, is going to put some pressure on the market,” Gross said.

Gross is the second famous economic expert to sound the alarm on Trump's presidency and its impact on the economy. Earlier this year, Nouriel Roubini, dubbed Dr. Doom for accurately predicting the US subprime crisis in 2008, suggested that Trump's economic plans "now pose the greatest threat to economies and markets around the world," per Raw Story. 

"The biggest geopolitical risk to growth and markets is the U.S. election," said Roubini, noting that although Trump and Biden have similar foreign policy aims, there are differences between them when it comes to NATO, Europe, and the Russia-Ukraine crisis. "As the saying goes, 'It's the economy, stupid.' Trump's proposed economic-policy agenda is now the greatest threat to economies and markets around the world," he wrote.

Roubini cited Trump's more protectionist foreign exchange policies, which might have catastrophic effects on the entire world. Trump has already said he would impose a 10% tariff on all imports coming to the U.S. (the average tariff rate is currently about 2%), and presumably even higher tariffs on imports from China. This would spark new trade wars, not only with strategic rivals like China but also with America's allies in Europe and Asia, such as Japan and South Korea," 'Dr. Doom' wrote.