Forget stocks. The one market reaction that really counts this morning is in the bond market, and its message is: economic reflation is on the way.

Yields on Treasury bonds have surged to their highest levels in months on the back of a historic night which handed the Republican Party simultaneous control of the White House, Senate and House of Representatives for the first time since 1928, in anticipation of a fiscal stimulus that will drive future interest rates higher.

The benchmark 10-year Treasury yield raced to an eight-month high on the result, while the benchmark 30-year yield hit 2.80% for the first time since January. Stock futures, meanwhile, although they swung sharply overnight, are essentially back where they were before the FBI announced last Friday that it hadn’t found any fresh evidence against Hillary Clinton.

“Trump has promised a combination of lower taxes, higher issuance of public debt and more spending. All of those are inflationary,” said Alberto Gallo, a partner and portfolio manager at Algebris Investments in London. “On top of that, tariff increases and restrictions on immigration also create inflation.”

In his victory speech, Trump had said “We are going to fix our inner cities, and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, and we will put millions of our people to work as we rebuild it.”

The Treasury market is selling off, driving yields higher.

If Trump is true to his promises on immigration, that spending boost will be directed at a shallower pool of workers, protected from competition at the lower end of the pay scale.

The fact that Trump will have a much more cooperative Congress to work with than Barack Obama ever did will also remove many of the constraints to Trump’s fiscal plans, something that may unsettle Treasury holders. And that is just the base case. There is also the ‘tail risk’ (a low-probability, high-impact event) that President-elect Trump revisits his campaign hints about strategically defaulting on Treasurys as a way of reducing the country’s debt burden.

The key question for debt markets now is whether the Federal Reserve will press ahead with the interest rate hike in December that it has signaled with increasing clarity, or whether it will hold off for fear of causing more short-term volatility (the S&P 500 VIX index, a measure of volatility known as Wall Street’s ‘Fear Gauge’, has risen strongly overnight but is still well short of the levels seen after the U.K.’s Brexit referendum in June).

The reaction in the market for interest-rate futures indicates that markets are already paring back expectations for a December rate hike, but Algebris’ Gallo argues that it is still warranted by the economic data. And the President-elect himself, as the campaign wore on, has become more critical of the Fed’s policy of keeping interest rates low.

Megan Greene, chief economist with Manulife Asset Management, says the Fed is now in a tricky situation, especially if, as many predict, Trump implements protectionist policies that tip the economy into a recession.

“It would certainly have difficulty hiking rates into a recession (but) at the same time, Trump’s policies are likely to be inflationary, and so the Fed would aim to defend its 2% inflation target,” Greene said, with a nod to the dilemma faced by the Bank of England since the Brexit vote.

But Greene too assigned a greater risk to inflation overshooting. “Given the choice to prioritize growth or inflation, the Fed is likely to focus on stimulating growth,” she said.