Analysts at JPMorgan have sounded the alarm on the potential inflationary effects of Donald Trump's presidential election win. In a note to clients, they highlighted that markets have not yet factored in the risks associated with Trump's key policies, which could lead to higher inflation. The analysts pointed out that Trump's campaign promises, including extending the 2017 tax cuts, restricting immigration, and imposing tariffs on imports, could contribute to inflation.

The extension of the 2017 tax cuts, set to expire in 2025, could lead to a broader fiscal and debt trajectory for the United States, driving inflation higher. Additionally, Trump's plan to deport foreign-born illegal immigrants could tighten the labor market, putting upward pressure on wages. The imposition of broad tariffs on imported products would likely cause domestic prices to rise, further fueling inflation.

The analysts also noted that Trump plans to replace Federal Reserve Chairman Jerome Powell after his term ends. While changes to laws reducing the Fed's independence appear unlikely to pass Congress, rhetoric alone could influence markets by raising long-term inflation expectations and steepening the US Treasury curve.

The note concluded that Trump's policies pose significant upside risks to inflation, inflation expectations, and the issuance of US Treasury bonds. This warning comes as a reminder to investors to be cautious and consider the potential inflationary impact of Trump's election win.

In conclusion, JPMorgan's warning highlights the importance of considering the potential inflationary effects of Trump's policies on markets. As the presidential election approaches, investors must be aware of the risks and potential consequences of Trump's campaign promises. By understanding these risks, investors can make informed decisions and navigate the markets with caution.