Trump could dial back some proposed policies to avoid upsetting a roaring stock market, Wharton professor Jeremy Siegel says

• Wharton’s Jeremy Siegel said Trump may tone down his economic agenda to appease investors.

• That’s because Trump is “the most pro-stock market president” in history, Siegel told CNBC.

• Siegel added that investors in the bond market showed a tantrum over some of Trump’s proposals.

Donald Trump may be reluctant to implement some of his sweeping actions Economic agenda To avoid losing the approval of investors in stocks and bonds, Jeremy Siegel, a Wharton professor, said Monday. .

In an interview with CNBCSiegel said he believes Trump will adopt a strong pro-market stance during his next term, even at the expense of some of his proposed economic policies. The chief economist cited Trump’s eagerness to point to the stock market as a measure of past success as a reason he may not want to upset a roaring bull market.

“President Trump is the most pro-stock market president in our history,” Siegel added. “It seems to me unlikely that he would implement a policy that would hurt the stock market.”

Reaction to some policies proposed by Trump, which economists believe will add to the crisis Federal deficit and Stimulating high inflation rateswas already seen in the bond market last week. Following the election, the yield on 10-year US Treasury bonds rose above 4.4%, its highest level since July.

Although yields have fallen and stabilized since then, Siegel said it’s a sign that bond investors may be ready to protest any policies that increase government debt or fuel inflation.

It can also be a sign of the presence of investors Concerned about the possibility of rising inflationThey expect interest rates to rise from the Federal Reserve.

“I thought what happened on Wednesday after his win when those returns went up was kind of a shot across the bow saying, ‘Hey, you know, just watch what you’re doing. We are there, and all Tax deductions “I promised, we’re very skeptical,” Siegel said. “The bond market and the stock market are going to be really big constraints on a lot of Trump’s programs.”

Siegel noted that with a Republican-led Congress, Trump’s proposal to extend the 2017 tax cut package looks like a “knockout,” though he said other challenges Trump expects Proposed tax cuts. Siegel predicted that if Trump implements all of the proposed cuts, yields could end up rising beyond 5%.

“So I think the trend towards raising long-term interest rates will be with us,” he added.

Siegel added that the former president is unlikely to do so either Take control away from the Fed. Despite reports that Trump is planning to Exerting more influence In terms of central bank policy decisions, this move is likely to prove unpopular in the markets.

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