US stocks and other risky assets rallied on Wednesday after Donald Trump’s decisive election victory, but bond investors highlighted why euphoria could be shortlived if the president-elect’s campaign policies drive up inflation.

“Sugar rush is a good term for what we’ve experienced,” said Tina Fordham, founder of advisory firm Fordham Global Foresight, which advises investors and corporate executives on political issues. While the Republican victory was good for equities, she said “we are not in the same economic environment that we were in 2016, and Trump’s policies are inflationary. I think it does eventually intersect with expectations about the Fed rate cutting cycle, and geopolitical risks.”

The S&P 500 and Nasdaq Composite both set new record highs on Wednesday, jumping 2.5 per cent and 3 per cent, respectively.