Source: TD Securities
Tax & Fiscal
Trump White House
Republican Congress
Extend 2017 tax cuts, SALT deduction at risk Lower corporate taxes from 21% to 20% Increase defense spending Low risk of debt ceiling standoff
Split Congress
Democrat Congress
Split Congress
Democrat White House
2017 tax cuts renewed, but with some increased taxes offsetting deficit increase
2017 tax cuts renewed, but taxes raised for top earners
Renew 2017 tax cuts, but raise taxes for top earners Raise corporate taxes rate from 21% to 28% More social spending
Low risk of debt ceiling standoff
Corporate tax rate unchanged at 21% High risk of debt ceiling standoff
Tariffs and Immigration
Current tariffs maintained Tighter border policy, but no deportations
Current tariffs maintained Tighter border policy, but no deportations
10% tariff on all imports 60% tariffs on China (likely lower after negotiation) Deport 1-2mn undocumented immigrants
10% tariff on all imports 60% tariffs on China (likely lower after negotiation) Deport 1-7mn undocumented immigrants
Increase corporate taxes from 21% to 25% Highest risk of debt ceiling standoff
No material impact on inflation/growth
No material impact on inflation/growth
Tariffs and immigration raise inflation profile by 0.8-1.0pp in 2025
Tariffs and immigration raise inflation profile by 0.9-1.3pp in 2025
Growth and Inflation
Further support for pro-ESG/IRA policies
Pro-ESG/IRA policies to continue
Roll back regulation Threaten Fed independence Attempt to remove SEC/other agency heads
Roll back regulation Threaten Fed independence Attempt to remove SEC/other agency heads
Regulation
Negative GDP growth impact of 1.0-2.0pp by 2026
Negative GDP growth impact of 0.8-1.2pp by 2026
Bull steepening as market focuses on inflation/growth Lower debt ceiling standoff risks
Gradual bull steepening as market focuses on inflation/growth
Initial bear steepening likely to turn into bear flattening amid Fed on hold
Initial bear steepening likely to turn into bear flattening amid Fed on hold
Rates Implications
Gradual easing to 3% neutral rate
Gradual easing to 3% neutral rate
Pause rate cuts and monitor inflation/growth shock
Pause rate cuts and monitor inflation/growth shock
Fed Reaction
Harder landing brings additional cuts, with rates reaching 2% by 2026
After H1 2025 reassessment, resume gradual cuts
TIPS BEs widen on rising inflation expectations
TIPS BEs widen on rising inflation expectations
Debt ceiling standoff could accelerate bull steepening
USD negative, favoring ROW over US equities U.S. current account becomes an issue
USD negative, reflecting status quo Frictions with China, but no trade war
USD positive as Trump still has power over tariffs and trade policy
Very USD bullish as equities and macro favor USD Tariffs favor U.S. growth over Europe, China
FX Implications
Risk negative amid expectations of more regulation and business unfriendly policies
Risk asset positive amid expectations of policy gridlock
Risk asset positive amid expectations of deregulation
Risk asset positive amid expectations of deregulation
Equity Implications
Tariff/deportations remain source of uncertainty
Tariff/deportations remain source of uncertainty
Higher regulation to weigh on sentiment
U.S. equities still outperform ROW, supporting USD
Tax & Fiscal
Tariffs & Immigration
Regulation
Growth & Inflation
Fed Reaction
Rates Implications
FX Implications
Equity Implications