Bond bubble could burst with explosive impact

Donald Trump's formula of tax cuts, spending and deregulation risks a US boom followed by an almighty bust

It remains early days for assessing Donald Trump's economic plans, not least because of the difficulty in separating the serious policies from the wilder campaigning rhetoric, but the bond market seems clear on the central point: the president-elect intends to cut tax taxes, increase spending and deregulate.

Investors know what that cocktail produces. It boosts growth, at least for a while, and it generates inflation. Even famed liberal economist Paul Krugman has switched from predicting an imminent global recession. "Don't be surprised if economic growth actually accelerates for a couple of years," he says, because the "dire effects of Trumpism" will take time to become manifest.

Related: Global bonds slump as Trump prompts inflation fears