- Donald Trump’s return to the White House could lead to increased market instability in 2025, according to investment bank Piper Sandler, describing the economic environment as a “recipe for volatility.”

The investment bank draws comparisons to the early 1980s, noting that Trump’s return mirrors the conditions Reagan faced when he took office, inheriting inflationary pressures and policy imbalances.

Piper Sandler notes that Trump will come into office after years of stimulative fiscal and monetary policies, just like Reagan. Federal spending has surged, inflation is holding steady, and bond markets are already reacting.

“Bond vigilantes” have already started pushing yields higher, speculating that the Fed’s recent rate cuts may have gone too far, too fast.

Federal spending, which jumped 10.4% year-over-year in 2024, continues to fuel inflation, unlike tariffs, which act as a one-time tax rather than a continuous driver of rising prices. The firm emphasizes that tariffs may “pull up relevant prices,” but the inflationary impact pales in comparison to unchecked government spending.

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