Posted on 04/11/2025 7:05:49 PM PDT by lasereye
While President Trump projected confidence, the White House was haunted during the latest round of tariff turmoil by the possibility of a “bond market death spiral.” Having worked as a venture capitalist before entering politics, Vice President J.D. Vance had previously regarded the phenomenon as one of his greatest concerns.
A plunging stock market took center stage, but it was another sell-off that alarmed Wall Street.
Ahead of the tariff deluge, investors offloaded government securities, sending the yield on Treasury bonds ever higher. Amidst the trade uncertainty, the 10-year Treasury bond climbed to 4.51% while the 30-year hit 5% – the highest mark since November 2023. Both consumer and federal debt, as a result, became more expensive to hold. Higher yields eventually mean higher borrowing costs for everything from auto loans and mortgages to maintaining the federal debt itself.
Trump, a real-estate mogul before politics, knows the effect of rising bond markets on the ability of banks to lend. Trump, the politician, also knows how fears of a credit crisis can bring low a world leader.
Liz Truss became the shortest-serving prime minister in British history when her proposal to pay for tax cuts with government borrowing spooked that country’s bond markets. She resigned in 2022 as a result. Across the Atlantic, an Ohio Republican was watching closely.
“Interest rates shot through the roof, and it took down her government in a matter of days,” Vance said of Truss during an interview with Tucker Carlson last September. There are differences between the politicians and political systems, he noted of Trump and Truss, “but it would be devastating to the president if you had this bond market death spiral.”
(Excerpt) Read more at realclearpolitics.com ...
Bond rout starting to sound market alarm bells
A lot of the commenters thought it's much ado about nothing.
The democrats left the country broke !
THE SHY IS FALLING, SPREAD THE BS.
THE SHY IS FALLING, SPREAD THE BS.
What’s a ‘shy’?
Oh is that why Liz Truss fell? LOL.
Liars.
What if we Americans purchased the bonds? Stop the falling.
The biggest problem for investment bankers is just what to do with the $800 Billion that arrives every week in the form of 401K plan monies from people’s paychecks. Imagine that right now? Hugh and series sums of cash. Managing those funds would be terrifying.
Ten-year Treasury yield up 14 percent since “Independence Day. Thirty-year up 10 percent. Dollar down against the euro, the pound and the yen.
1) 4.5% is nothing, historically
2) History never say $37Trillion in debt paying that 4.5%
3) Only 30% of that $31 Trillion (the Fed has $6T that refunds interest to Treasury) is owned by foreigners, so your point about domestic buys is legit
4) Buying that debt at 4.5% is a decision to be made while not knowing if you wait a few weeks it might get you 6% return on your money instead of 4.5%
I think the article is implying that VP Vance advised Trump it was time to change approach to the tariffs, because of rapid and alarming moves in the bond market.
If this is how it mostly happened, I am thankful Trump has a VP with enough professional experience and personal confidence to speak up and alert his Boss to possible outcomes.
A VP like Mike Pence would have just let it all play out.
“But Donald, isn’t this the result that you wanted for the country? Mike would have asked, pretending to be confused.
say=saw
I wouldn’t say we are broke, far from it. We do need to adjust spending but the Federal government owns hundreds of trillions of dollars in assets (e.g. land and mineral rights). The whole point is to make sound decisions now and in the future so that we don’t end up having to liquidate assets to pay our bills.
This is just BS. The new MSM narrative is Trump panicked and pulled the plug on the Tariffs. He knew/knows exactly what he is doing and it is all part of a plan.
Our mortgage rate went from 6.250% on Monday to 6.875% today.
Thankfully I had all my loans locked in, but very high certainty some loans didn’t get locked, that will be ugly.
Worst interest rate rise since 1981.
Yeah it’s a big deal.
Strange to see rates rise as stocks fall .
Very unusual
What’s Independence day? Did you mean Liberation day?
The problem with assessing mineral rights under some acreage of land — is you don’t know anything is there until it is explored and nobody is going to do the exploring without very high confidence of presence.
This has always worked this way. There is also the matter of needing to find a buyer for these assets, which would likely be domestic and thus is money that might have earned a taxable return until transferred.
Sounds like more globalist tamper tantrum BS.
First, markets are made of millions of people moving money for multiple reasons. The financial journalists write headlines and articles about what the market is doing and reacting to that is not based on anything but conjecture. In fact, they act as if they have deep knowledge when in fact if they did, they would not be sharing it.
The day Trump supposedly was spooked by the market is about 4 business days before the 15th of April, The 2024 year that individuals had record income from investment and also coincides with taxes due by all corporations. It is just as probable that the sell off of bonds was done to raise cash for the taxes due.
That isn’t true , interest rates in 1990 were higher, I seem to recall about 8-9%, however houses only cost about 80k
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