The return of Donald Trump as president would be significantly more bearish and disruptive for the US bond markets than Joe Biden's re-election, said bond investor Bill Gross in an interview with the Financial Times (article behind paywall). A second Trump presidency would drive deficits higher, according to the influential investor.

«Trump is the more pessimistic of the two candidates simply because his programs entail further tax cuts and more expensive things,» Gross said. While the Biden administration also spent far more money than it collected in taxes, a Trump win would be significantly more disruptive for the bond markets.

«Total Return is Dead»

The former Pimco chief and manager at Janus Capital had become known for his bond strategies. However, the burgeoning US deficit had prompted him to rethink, and recently he had argued in a commentary that the Total Return strategy was dead.

«The culprit is the deficit. A 2 billion-dollar increase in supply annually will put pressure on the market,» he said. The US budget deficit reached 8.8 percent of GDP last year, twice as high as in 2022 with 4.1 percent.

But even with regard to the development of stock prices, investors should «temper their expectations.» «Over time, markets should decline. For me, that means prices will rise less sharply than they have recently,» he said.