Debt will rise, uncomfortably, in the age of Trump

STOCKS may attract attention due to their inherent volatility, but the bond market holds more significance.

The sharp rise in government bond yields in the wake of Donald Trump's victory in the US presidential election is welcome, for it can potentially drag the world out of a low yield, deflationary trap. But in the longer term, a potential increase in global debt funding indiscriminate government spending is cause for concern.

US investors are now pricing in higher inflation and economic growth. They expect a unified Republican government to push through laws on tax cuts and infrastructure spending. More money will need to be borrowed to repair roads and runways, and perhaps construct a massive wall along the US-Mexico border. Mean…