Financial markets don’t usually start to price in possible election outcomes until a month or two before Election Day. Investors are getting an early start this year.

Since July 27, the interest rate on 10-year Treasury securities has jumped by about 10 basis points, or one-tenth of a percentage point. That may not sound like a lot, but it’s a reversal of the downward trend that has taken hold in recent weeks as inflation data has come in very mild and stoked hopes of interest rate cuts.

Around June 27, something seems to have changed investors’ interest rate outlook. Hmm, what might that have been? Oh right! June 27 was the date of the first presidential debate between President Joe Biden and former President Donald Trump, during which Biden bombed and didn’t even look coherent at times.

Biden’s performance was so disconcerting that it rapidly changed the election outlook. Trump’s odds of winning rose, but more importantly for markets, the odds of Trump winning and Republicans gaining control of both houses of Congress also rose. Markets care about that because a president can’t implement his full agenda unless a friendly Congress is able to pass the legislation he supports.

“This is all about bond investors beginning to price in the possibility that not only will Donald Trump emerge victorious but that the GOP will take the House and Senate too,” economist David Rosenberg of Rosenberg Research wrote in a July 3 analysis. “Investors are sniffing something out here, which is GOP control of Congress.”

As a real estate developer who once called himself the “king of debt,” Trump favors the lowest rates possible. But Wall Street thinks Trump’s policies in a second term would be more likely to push rates up than down.

Read more: How much control does the president have over the Fed and interest rates?

There are a couple of reasons for that. First, Trump wants to impose new tariffs on imports, which would raise prices on thousands of everyday items, which is basically inflationary. This would come at a time when built-in inflationary pressures, such as tight global energy markets and shipping disruptions in the Red Sea, are much stronger than when Trump was president from 2017 to 2021.

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In 2022, the Federal Reserve began rapidly raising short-term rates to combat inflation that peaked at 9% that year. The Fed stopped raising rates last summer, and inflation is now 3.3%. Recent data suggests that if nothing changes, inflation should continue to decline and the Fed might be able to start gradually cutting interest rates by the fall, which would benefit home and car buyers and many other borrowers.

But Trumpflation, if it develops, could put a halt to those rate cuts. The Fed could postpone rate cuts even on the prospect that Trump might win in November — especially if markets are signaling that that’s the expected outcome. And if Trumpflation actually materialized, the Fed might have to raise rates rather than cut.

Trump also wants to cut the corporate tax rate by another percentage point and extend individual tax cuts that are set to expire at the end of 2025. Such moves would force the Treasury to borrow much more than current forecasts, pushing record-high federal deficits even higher.

There have already been some disconcerting blips in Treasury auctions in recent months because of the sheer volume of federal debt on the market. Issuing even more could trigger the debt crisis many analysts have been expecting for years. That will happen if/when there aren’t enough buyers for all the debt Uncle Sam is issuing, which will force rates up in order to attract buyers. When Treasury rates rise, all borrowing rates rise in tandem.

The recent rise in the 10-year rate following the June 27 debate was even more stark until Fed Chair Jerome Powell made optimistic remarks about the outlook for inflation on July 2. That brought long-term rates down a bit and reignited hopes for a rate cut in September.

But there’s still a Trump premium on rates. The total run-up before Powell spoke was about 20 basis points, or two-tenths of a point. So it’s fair to consider that markets, for now, are pushing long-term rates two-tenths of a point higher than they would otherwise be based on the odds of a Republican sweep.

If Trump did win, and rates rose the way investors seem to expect, it would likely put Trump on wartime footing from Day One. Trump has a long history of bashing the Fed and its chair, Powell, for not pushing rates lower. During Trump’s first term, he could argue that there was little risk of inflation, so why not lower rates?

Inflationary pressures are much stronger now, and that won’t change if Biden leaves office, since much of the pressure comes from outside the United States. If Trump managed to jawbone the Fed into lowering rates anyway, the result would most likely be higher inflation — and the same ire from voters that has driven Biden’s popularity underwater. Voters may not see that until 2025, but it’s already a big blip on the market’s radar.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.

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