The Bond Market Doesn't Trust the Treasury

Reason ^ | Jared Dillian

[GrootheWanderer]

Ten-year interest rates have vaulted from around 4.5 percent in July to nearly 5.3 percent this week. That may not seem like a lot, but in the history of the bond market, such a rapid rise in rates is almost without precedent. The last time it happened was in 1994, when the "bond vigilantes" relentlessly sold bonds in response to Hillary Clinton's vision of "managed competition" in healthcare. The person on the street knows much more about the stock market than the government bond market, but it is the bond market that has the ability to impose fiscal discipline on the government.

The Clintons may have retreated from their healthcare plans in 1994, but there is no sign that Treasury Secretary Scott Bessent or President Donald Trump have learned their lesson yet. Instead of having meaningful discussions about reducing spending and entitlements, they are dreaming up ways to intervene in the bond market to get the desired result: lower interest rates.

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TOPICS: Business/Economy; Government; News/Current Events; US: District of Columbia
KEYWORDS: bonds; budget; debt; deficit; spootheblunderer; tds; terminaltds; thetds; theteedeeess

[GrootheWanderer]

Bessent is a "former" employee of George Soros and Warsh has close ties to him.

[Raycpa]

I think the author has a logic problem. He establishes that the bond market is not reacting to either inflation or government spending and then moves to this reason:

The bond market expresses doubt that these officials will take positive action to do anything about inflation or spending.

[unclebankster]

I think the author has a logic problem. He establishes that the bond market is not reacting to either inflation or government spending and then moves to this reason:

The bond market expresses doubt that these officials will take positive action to do anything about inflation or spending.

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The author seems to want to present a scary economic scenario where one doesn’t exist. There is nothing in the current Treasury bond pricing to warrant economic skepticism about the future.

I’d love to see & read some coherent observations and insight on why the current yields & pricing are an “economic doomsday” moving forward, but maybe I’m a blind man.

“I don’t see it being a problem.”

[PghBaldy]

First two sentences in the excerpt tell the story you are asking for.

[GrootheWanderer]

This is about long-term bonds. They won’t be affected by near-term trends unless the market does not expect those trends to change.

[Miami Rebel]

In your first sentence you say the market isn’t reacting to inflation.

In your second you say the market questions “officials” (Treasury?) can’t fight inflation.

[PGR88]

The Bond Market Doesn’t Trust American Voters.

[Raycpa]

I am capturing the essence of the author’s argument, which is not logical to me.

[bankwalker]

the bond market is actually just a multitude of human beings that are just trying to make money against each other without losing too much along the way ...

[Presbyterian Reporter]

Financing the government debt and deficits is not the only problem facing Bessant.

The Tech Bros and the related companies need about $5 Trillion to finance the construction of the AI infrastructure.

When Govt and AI are both demanding more of “other people’s money”, the other people are saying: “Raise the interest rate you are going to pay me and I will lend you the money”