The bond market’s tumble this week on President-elect Donald Trump’s proposals to boost fiscal spending and stoke inflation threatens to throw a wrench in his plans before he even takes office.

Benchmark 10-year Treasury yields rose this week by the most since the 2013 episode known as the “taper tantrum,” while inflation gauges climbed to 16-month highs in anticipation of the Republican’s proposals for infrastructure spending and tax cuts. The carnage spread worldwide, with more than $1 trillion wiped off the value of global bonds, according to Bank of America Corp. data.

The leap in yields in a world betting they’d stay lower for longer may spell trouble for U.S. growth prospects because it may make borrowing more costly for individuals, companies, states, municipalities and the federal government itself. The 10-year Treasury serves as a benchmark for lending rates from mortgages to corporate obligations. 

It would also raise credit risk for high-debt countries in Europe, Francesco Garzarelli at Goldman Sachs Group Inc. said in a report Friday. The surge this week risks spooking bond investors, potentially accelerating the selloff and spurring volatility in equities and corporate securities.

“The ongoing exuberance around even faster U.S. reflation post the U.S. election may prove ultimately self-defeating without much more convincing signs of a growth upswing,” Garzarelli, co-head of global macro and markets research in London, said in the note. “Until underlying inflation in Europe and Japan also increase, it is difficult to see a self-reinforcing bond selloff as the respective central banks will want to prevent a sharp tightening in financial conditions.”

The 10-year Treasury yield climbed 37 basis points this week to 2.15 percent, higher than the median forecast in a Bloomberg survey for this quarter and every period through September 2017. None of the 65 analysts surveyed predicted that the yield would be above 2 percent by year-end, based on their most recent estimates.

2.5% Projection

Goldman says the 10-year yield will climb in 2017 to 2.5 percent, a level the U.S. economy can probably handle without threatening growth. The risk is the selloff accelerates and yields climb faster than expected, potentially stymieing the U.S. expansion and pushing the European Central Bank to extend its quantitative easing program to prevent further shocks to interest rates in the region.

Trump’s pledges include cutting taxes, and spending from about $500 billion to $1 trillion on infrastructure over a decade. Based on the lower end of that range, his plans would boost the nation’s debt by $5.3 trillion, the non-partisan Committee for a Responsible Federal Budget estimated. The government’s marketable debt has already more than doubled under President Barack Obama, to a record of almost $14 trillion, though that borrowing came with yields near record lows.

“The current level of long-term yields in the U.S. and in other main economies is by no means ‘restrictive’ for growth,” Garzarelli wrote. But with another increase in interest rates like the one over the past week, “higher bond yields become a threat for the expansion.”