Bond Market’s Trump Trade Is Looking Like a Recession Play

Bond traders are signaling an increasing risk that the US economy will stall as President Donald Trump’s chaotic tariff rollouts and federal-workforce cuts threaten to further restrain the pace of growth.

Speculation that Trump would pour stimulus onto the nation’s expansion — and keep upward pressure on Treasury yields — is being rapidly swept aside less than two months into his presidency. Instead, traders have been piling into short-dated Treasuries, pulling the two-year yield down sharply since mid-February, on expectations the Federal Reserve will resume cutting interest rates as soon as June to keep the economy from deteriorating.