Unsurprisingly, the Chinese are happy to sit still and watch. First, a hot US growth rate is essential for Trump to have any chance of offsetting the cost of his huge corporate tax cut. But there is a big downside here. To curb inflation that so often accompanies such high-octane growth, the Federal Reserve will have to keep raising interest rates. That's a definite disincentive for stock investors, who will begin to find higher yields in bonds than stocks, driving the stock market even lower. These higher bond yields are a boon for investors who may be buying US securities that have to be sold to finance America's ballooning deficit -- a direct product of the Trump tax cuts, narrower than hoped growth, among other factors. And China is still one of the biggest buyers of American bonds.
end partial quote from:
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