Lost in the post-election stock market euphoria is the fact that the bond market has suffered a dramatic wave of selling that is rare in recent history. It's sent interest rates on U. The rate on year Treasury notes has surged to 2.

Bonds won’t protect you if stocks crash - MarketWatch

Last week's spike in Treasury rates was so big, that it had only happened three times before in the last decade. The move stands to have broad repercussions for all Americans. Not only will the U. That's because Treasuries are used as the benchmark for many other forms of credit.

Yes, The Stock Market Might Crash - Business Insider

The bond market's reaction shows investors believe Trump's plans will add to America's already-massive debt load and cause inflation to rise. The Trump market rally: Too far, too fast. Trump has pledged to give the American economy a shot in the arm by spending heavily on infrastructure.

That pledge has been great news for infrastructure stocks like Caterpillar CAT and U.

If a Market Crash Is Coming, Here's What to Do With Your Stocks, Bonds and Mutual Funds - TheStreet

Trump's win has also sent defense stocks like Lockheed Martin LMT flying higher because he wants to ramp up military spending. The Committee for a Responsible Federal Budget estimates Trump's fiscal plans, especially the tax cuts, would cause the U.

What Trump should do first to grow the economy. Inflation back from the dead?

What Happens to Bonds in a Stock Market Crash? — Oblivious Investor

Investors are also bracing for Trump stimulus to carry inflation out of the post-crisis doldrums. Prices could also rise if Trump's anti-trade stance means more goods are made in America, according to Ed Yardeni, president of investment advisory Yardeni Research, wrote in a note.

Rates are rising because many anticipate the Federal Reserve will hike interest rates next month for the first time in a year. If Trump's policies end up causing growth and inflation to tick up, it could cause the Fed to raise rates faster than previously planned. It's possible the bond market reaction is overdone.

Much will depend on what policies Trump actually pursues -- and how much support he gets from the Republican-led Congress. Higher rates will make it more expensive for the U.

Bespoke Investment Group warns "soaring" Treasury rates signal a significant jump in mortgage rates that on top of rising home prices could hurt the housing market. So far, the stock market hasn't seemed too concerned by the rip higher in bond rates. But that may change. After all, extremely low interest rates helped fuel the stock market's rise over the past seven years. By contrast, higher returns for risk-free Treasuries may make investors think twice before betting on risky stocks.

Continued selling in the bond market could also mark the end of the decades-long bull market in bonds. BlackRock's Koesterich said absent a "pretty catastrophic shock" to the global economy, bond rates likely bottomed earlier this year. Walter Zimmerman, senior vice president at United-ICAP, argues the "historic bubble has burst" and warns that selling could be dramatic.

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