Discounting the D.C. Effect in the Bond Market

One thing we have seen underscored in 2025 is that the bond market can change its mind very quickly, particularly as it relates to policy emanating from Washington, D.C. Following President Trump’s election win, the dominant theme in the U.S. Treasury (UST) arena was that his Administration’s policies would lead to higher budget deficits, increasing UST supply and, ultimately, higher rates for maturities like the 10-Year yield.