From the ballot to the bond market: the impact of Donald Trump's return on US treasury yields and inflation expectations

Purpose This study examines how Donald Trump's re-election on November 6, 2024, influenced US financial markets, focusing on long-term interest rates and inflation expectations. Understanding market responses to political outcomes helps investors manage risk and supports economic forecasting and policy decisions. Design/methodology/approach We use daily data from August 1, 2024 to February 28, 2025 on the 10-Year Treasury Yield (TY10) and the 5-Year Breakeven Inflation Rate (BEI5). Four econometric models are utilized, including an Interrupted Time Series (ITS), Local Projections (LP), Event Study, and Quantile Regression (QR). All models control for key macro-financial factors, including the Economic Policy Uncertainty Index (EPU), the CBOE Volatility Index (VIX), and the US Dollar Index (DXY). Newey-West and bootstrapped standard errors are used to correct for autocorrelation and heteroskedasticity. Findings Results show that TY10 and BEI5 increased gradually after the election. The ITS model showed a trend reversal in which yields and expectations had been rising before the election but began flattening or falling afterward. The LP model found significant increases starting on Day 1, peaking by Day 3, and persisting through Day 7. The event study confirmed a cumulative rise of 8.5 basis points in TY10 and 5 basis points in BEI5. QR revealed stronger effects in lower parts of the distribution. Among controls, DXY had a consistently strong positive effect, while EPU and VIX had more mixed and context-dependent influences. Originality/value This study adds new insight into how financial markets respond to a major political event using high-frequency data and multiple methods.