Bond Market: How Important?

quote:

---

The ‘safe haven’ status of U.S. Treasuries is under review in the Trump era…

…, but the potential for more tariffs remains. And the bond market freak-out demonstrates how much damage has occurred already

There are a lot of reasons investors (likely including some foreign governments) wanted to sell. Some wanted to invest elsewhere in the world; others needed to exit bonds to have more cash on hand. But, at heart, it all came down to the same belief: The United States is no longer looking rock solid. It’s impossible to make sense of what Trump is doing — and it’s not worth the risk of finding out just how much will break because of his actions.?

For the United States, the repercussions of all of this could have been substantial — and almost all negative. As investors sold bonds, the yield (the interest rate) soared. The 10-year Treasury yield hit 4.51 percent, up from 3.9 percent earlier in the week, and the 30-year Treasury yield briefly topped 5 percent. This couldn’t be worse for Main Street. It means mortgage rates may top 7 percent again, and borrowing costs for cars, businesses, etc., will surge. It also means the United States government will have to pay even higher interest costs.

“The post Liberation Day mini crisis moved to a more dangerous level overnight with a fairly huge bond sell-off,” wrote Jim Reid, a research strategist at Deutsche Bank. “It will put much more pressure on the U.S. administration than just an equity sell-off.” (Reid was correct: It did up the pressure to a level even Trump could not sustain).

---

quote:

---

The shite show isn’t over.

---