Trump continues $ 100 million for bond purchase: here is what he could report on future interest rates

Trump put millions of dollars behind his bond strategy in February, especially between $ 500,000 and $ 1 million each in bonds issued by companies such as Home Depot, T-Mobile and United Healthcare. Another bet between $ 250,000 and $ 500,000 was in debt issued by META, on the basis of a CNBC calculation of 690 transactions reported at the government’s ethics office since January and published on Tuesday. He also bought debts issued by local American governments, gas districts, water supply districts, hospital authorities and school boards, according to CNBC.

The White House did not immediately respond to FortuneComment request.

Investors generally turn to bonds because they are less volatile than shares. An obligation is like a loan which pays interest to an investor, generally semi -annually, over a defined period. Once this period ends and that the obligation reaches maturity, the investor recovers his main investment.

Trump’s purchase frenzy stands out because he, unlike other presidents, has not put his investments in a real blind trust. Otherwise, Trump’s bond purchases, whether led by him or the person responsible for his finances, resemble the typical bet of a deeply pocket investor – the one who thinks that interest rates should fall, said Russell Rhoads, a clinical teacher of financial management at the University of Indiana.

Because the prices of bonds generally increase when interest rates drop, it is possible that Trump made Trump made that betting hoped that he could later sell the bonds for profit. The rates are likely to lower more quickly for companies than for state bonds because they are more risky, said Rhoads. Trump’s insistent pressure for the Fed reduces the rates could also “talk about his book,” added Rhoads.

“You could delete the way he pushed so much so that the Fed drops rates like a portfolio director who went to CNBC and spoke positive of a stock that keeps a large part to try to bring other people to buy it,” said Rhoads Fortune.

Fed and interest rates

The Fed has held stable interest rates between 4.25% and 4.5% since the end of 2024, although some investors are turning to the September bank meeting for a possible drop in rates.

The purchase by Trump of municipal bonds, issued by the governments of states and premises, could also be part of the investment strategy, as the interest they return are generally exempt from federal income taxes. An obligation of the original state of an investor will generally be exempt from state taxes. With the stock market close to the summits of all time, a preference for obligations could be wise.

“It is just a decision to manage the logical portfolio, as opposed, you know, something he knows about the rates we do not know,” said Rhoads.

Trump has maintained ultimate control over his businesses and investments, while delegating his business empire to his sons Donald Trump Jr. and Eric Trump. The president and his immediate family would have seen profits of $ 3.4 billion in his mandate, in particular his cryptographic transactions, THE New York reported. The president and the vice-president are exempt from the main law aimed at preventing conflicts of interest of government representatives.