Posted on 04/09/2025 7:54:55 AM PDT by Cronos
..The government sell bonds - essentially an IOU - to raise money from financial markets and these are viewed as a safe investment.
The US does not normally need to offer high rates to attract buyers but on Wednesday the interest rate on bonds spiked sharply to touch the highest level since February at 4.5%.
...the sale of bonds poses a major problem for the world's biggest economy.
The interest rate for US borrowing over 10 years has spiked sharply in the past couple of days up from 3.9%.
While the interest rate on US government debt rose, the price of the bonds themselves fell as demand weakened due to investors offloading them.
"Rising bond yields mean higher costs for companies to borrow, and of course governments too," said Laith Khalaf, head of investment analysis at AJ Bell.
...Some analysts suggested that America's central bank - the US Federal Reserve - might be forced to step in if turbulence continues, in a move reminiscent of the Bank of England's emergency action in 2022 following Liz Truss's mini-Budget.
"We see no other option for the Fed but to step in with emergency purchases of US Treasuries to stabilise the bond market," said George Saravelos, global head of FX research at Deutsche Bank.
..There is been speculation some foreign countries, such as China which owns some $759bn of US bonds, might be selling them.
(Excerpt) Read more at bbc.com ...
This isn’t going to be good....
Well, this might cause a change in behavior. If not, let the pain continue.
This is all above my financial expertise, but I trust President Trump.
already posted: https://freerepublic.com/focus/f-news/4309913/posts
As I understand it, ChiCom sales had a greater amount to do with this.
Stay the course. The ChiComs will break.
It didn’t spark a sell-off. The sell-off is retaliation, since so much of our debt is held by foreign nations. This happened when Bush Sr got tried (briefly) to get tough with the Japanese. They dumped our debt; interest rates rose; and the treasonists at the Federal Reserve took this as an excuse to choke off our economy.
If the Chinese are now the bank, it’s a bank problem now.
“This isn’t going to be good....”
Are the acts of war by China, (the fentanyl plague being just one), against the United States not as bad? Or allowing the status quo to continue until the U. S. is an empty shell? Was the D Day Invasion pretty when it started?
Mexico, in a more sane time, would have been recognized as committing an act of war against the United States when it ferried millions of illegals through their country to import them into the United States. Same as when many countries across the world sent in their villians to get them our of their own country.
That is what happen when a nation afraid to create trubulence stands idly by and lets events destroy it.
If the nation is to survive, it has got to stand up and fight to the bitter end.
Retaliation has nothing to do with it. (Though it could be a factor going forward.)
First of all, domestic buyers have no appetite for paper right now. Typically, pension funds and insurance companies bid for 19% of three-year treasury auctions. This week they bid for just 6.2%.
Second, traders are talking about the unwind of ‘the basis trade,’ a trading strategy used by hedge funds.
Here’s how the trade works: Hedge funds are on the hunt for when the price of a government bond diverges from its future contract, an agreement to buy the bond at a later date for a specified price.
When a hedge fund spots a meaningful difference, it buys the cheaper bond and shorts the more expensive futures contract. In other words, the firm shorts the futures contract, with the hope that the higher futures price will fall to the cheaper bond price—the way it should.
At the point that the prices align—the bond price increases and the futures price drops—the hedge fund exits the trade, making a profit.
Currently there is about an $800 billion exposure to this trade, and it is highly levered. When it goes wrong, it goes very wrong.
Third, inflation expectations are heating up. As a consequence buyers demand a higher return on fixed income.
Just not sure that declaring this trade war on the entire world simultaneously was the best way to go. It may well encourage affected nations to band together to find alternatives elsewhere rather than making mass concessions.
I’ve said the same.
The scope of an untargeted, global approach makes for a logistical nightmare in negotiation and resolution and weakens our focus on the #1 trade miscreant, China.
The global melt down over a TINY US import tariff is astonishing . Does anyone have any sense of perspective. The first year (May - Dec) of the new tariff may bring in $300 billion at most. So why is the word melting down over a measly $300 billion?
I wish someone would explain that?
The highest since February oh my God!!! February! You mean 2 months? That just means that they are still lower than January.
Because this isn’t about tariffs or the money, obviously.
“Just not sure that declaring this trade war on the entire world simultaneously was the best way to go.”
You just can’t wrap your head around the fact that all these nations have been waging a trade war against the United States for decades. Again, I ask, and you just might be the ONE, who can explain how the tariffs and trade restrictions levied against the United States can be so good, but when the United States does it, it is evil.
“It may well encourage affected nations to band together to find alternatives elsewhere rather than making mass concessions.”
Does there exist another nation with the size market as the United States? Who else will buy their goods? North Korea? Bangladesh? Cuba?
Firstly - this is not “tiny” — As of the most recent data available in 2025, the global average tariff rate, specifically the weighted mean applied tariff across all products, is approximately 2.6%. This figure is derived from estimates by organizations like the World Bank, which calculates these averages using data from the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO). The weighted mean reflects tariffs applied to imports, adjusted by the volume of trade for each product, providing a more accurate picture of the actual trade barriers than a simple average.
So a 10% tariff on countries like Australia and the UK (who don’t have tariffs on US products and they actually import more US goods than they export to the US) is HIGH.
Secondly - the US is still the largest economy in the world, it sneezes and the world catches a cold
Thirdly - the tariffs kill some of the underdeveloped countries, and add tons of paperwork for other countries
These tariffs are unprecedented in scope, compared to the past 80 years.
Economically, the tariffs threaten to disrupt global supply chains and spike inflation. The U.S., as the world’s largest consumer market, imported $3.1 trillion in goods in 2023, and a sudden tax hike of this magnitude—projected to raise $2.2 trillion over a decade—could slash imports by $990 billion in 2025 alone, per the Tax Foundation. This hits industries hard, from tech (e.g., Apple, down 7% in trading) to retail (e.g., Five Below, down 15%), as companies face higher costs they’ll likely pass to consumers. JPMorgan now pegs global recession odds at 60%, up from 40%, reflecting fears of a demand shock and supply chain chaos.
Unlike targeted measures (e.g., past steel tariffs), this blanket approach spares no allies, causing massive uncertainty among the businesss community
odawg “ all these nations have been waging a trade war against the United States for decades”
How exactly has Madagascar been waging a trade war against the US for decades?
Madagascar’s key exports to the United States include vanilla, non-knit men’s suits, titanium ore, and also includes textiles, nickel, and cobalt. Not easily locally replaceable
Madagascar exported $756 million worth of goods to the United States.
In contrast Madagascar imports about $98 million of goods from the USA - mostly machinery, fabricated metal products, pharmaceuticals, food products, and agricultural goods like grains
It’s GDP per capita is $500 annually. What US products can they really buy?
OR, what about Australia?
due to the Australia-United States Free Trade Agreement (AUSFTA), effective since 2005. Under AUSFTA, nearly all US goods enter Australia tariff-free, with about 99% of US exports facing no customs duties.
And Australia has a trade deficit of about $34 billion with the USA - meaning AUS exports $25 B of goods and services to the USA while it imports $59 b of goods and services.
But they still got hit with a 10% tariff
Globalists attempting to force their will on Trump...
Will it be successful? We shall see.
Firstly - the US is a federation of states, not a nation state
Secondly - that statement describes a world that hasn't been like that since about 1990. In 2023, the USA's household final consumption expenditure (HFCE) stood at $18.8 trillion—about 68% of GDP
The EU internal market had an HFCE of $9.8 trillion
China's HFCE was $6.7 trillion—38% of GDP
India's HFCE was $2.4 trillion
Japan's HFCE was $2.3 trillion
The USA is the easiest market to target, but it is not the super-normous one it was at the time of the fall of the Berlin wall
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