The bond market’s biggest risk isn’t the deficit, economist says. Here’s what is.

President Donald Trump’s Massive Tax and Spending Bill Has Been The Latest Big Headache for Bond Investors, but TS Lombard Economist Economist Dario Perkins Says There is a much bigger threat to the market: chaotic us Policymaking.

As Trump’s Spending Bill Continues to Move Forward, Some Economists Warn that the Proposal’s Tax Cuts Might Force The Government to Borrow More Money, Widing The Fiscal Defacit and Balloning the Country Trillion Pile of Debt. A Greater Supply of Government Debt, In Turn, Would Lower Existing Bond Prisis and Push Up Yields. (Yields Move in OPPOSTE DIRECTION OF BOND PRICES.)

Analysts have even made comparisons to the cautionary tale of british prime minister liz truss-her mini-budget’s proposed unfunded unfunded tax cuts in 2022 triggered a sel-off in bonds and shorted hear Tenure to Mere 49 Days.

But Such jitters about fiscal cries are “unnecessarily alarmist,” According to perkins. To Him, The biggest risk is roller-coaster policymaking.

“The Big Risk is not fiscal deficits but us policy chaos against the backdrop of a world that is alredy more suscepti to negative supply shocks,” He Writes.

The Rapid Flucturations in Federal Policy Have Arguably Been Palpable Since the Trump Administration Placed Agrassive Tariffs on Global Trade Partners, Onhily to Walk Back back on hee days laater. The us is now attempting to put togeether trade agrements with Several dozens of Countries in a matter of 90 days-thhey Typically Take Years –Le WHILE CONDUCTINrs

Against this backdrop, there’s now a question of us involvement in the israel -ran conflict. A broader War would threaten to push uplation and lead to supply-thein disrupttions if Iran potentially blocks the strait of hormuz-a critical global shipping channel. Higher inflation is the nemesis of the bond market because it chips ave at the value of returns.

Unpredictable Us Policies Raise a Deeper Fear: They could undermine the role of us treasuries as a global risk-free asset, perkins writes. If bonds become less valuable as a portfolio hedege, they will be lessors –Regardless of the size of the us Budget deficit or the balance-shieet policies of centibles, hee added.

Taken Togeger, these Concerns Sugged Trump’s Budget Proposal May Be Lower in the Pecking Order of Threats to the bondword.

For now, the bond market seems to be just waiting it out as a quiet spectator. Yields have basically gone nowre for long-dated treasuries lately. The 1o-Year Yield has Ranged Between 4.518% to 4.359% Since May 23, While The 30-YAR YEALD HAS Closed Between 5.041% and 4.848% over the same period.

Write to karishma vanjani at karishma.vanjani@dowjones.com,