Bump in the “heart” of Trump-personomics, that is, economic policy, which has been followed by post-election Donald Trump In the international arena is the rise in yields of US state bonder.
In summary, speaking through the tariff war – lightning, in particular on April 2, Trump sought to shift investors from bond shares, with the aim of reducing their returns and thus costing the US government. The US State is loaded with the excessive debt of 36 trillion. Dollars and the main way to impair it is to reduce the cost of borrowing.
Although shares on the New York Stock Exchange have been plunged from April 2 (eg Dow Jones has lost almost 7% in total), US bond yields continue to growreaching a level of more than 4.45% today compared to the 4% of the prior to the announcement of duties.
US Ministry of Finance bonds, charged to Wall Street as so consistently safe that they are harmless, have long been serving as the first “wipe” for investors in times of panic, Bloomberg notes. They rally during the global financial crisis on September 11, and even when America itself was reduced.
But now, as US President Donald Trump launches a total attack on world trade, their situation as the world’s safe refuge is increasingly in question.
Officials, especially in long -term debt, have increased in recent days, and the dollar has fallen. Even more worrying is the pattern of recent market movements. Investors often dumped in 10 and 30 -year -old bonds – walking downward and upward yields – at the same time that they were selling frantically shares, cryptocurrencies and other dangerous assets.
Even if this momentum was to be faded as shares can eventually be smoothed, as most analysts expect, a message has been given to Washington policymakers: investors’ confidence in US bonds can no longer be considered a long -term bond.
This has a profound impact on the global financial system. As a global “without danger” assets, bonds are used as a reference point to determine the price of all, from shares to government bonds to mortgage rates, while serving as a guarantee of trillion dollars a day.
Bonds and the dollar draw their power from “the world’s perception of US budgetary and monetary management and the stability of US policies and financial institutions,” said Jim Grant, founder of Grant’s Interest Rate Observer, a budget newsletter. “Possibly, people are thinking about it again.”
The shares, bonds and dollar have all fell together yesterday, intensifying the concerns that foreign investors are receding massively from US assets. Thirty -year bond yields increased by 13 basis points to 4.87%, while the dollar fell against the euro and the Swiss franc as ever during a decade. Extensive Selloff has been extended today.
“Bonds do not behave as a safe haven,” said Padhraic Garvey, ING’s strategic interest rate analyst. “If we slip into the recession, there is a way for the lower returns to return. But here and now is to paint treasuries as an infected product, and this is not comfortable ground. Bonds have also been shown to be a painful trade. “
Not everyone is convinced that investors lose their faith in US public debt security.
Benson Durham, head of the global distribution of assets in Piper Sandler and former Federal Reserve economist, has made his own analysis by comparing basic public market measurements with them in Europe. Some measures suggest that investors have requested less premiums to have US debt compared to German and British bonds in recent days, he said.
Others say that more technical agents are behind the recent sale in the long run.
There are indications that the Risk compensation funds unravel leverage transactions that capitalize on price differences between bonds and interest rates or future fulfillment contracts.
US Secretary of Finance Scott Bessent supported this view on a Fox Business appearance earlier this week, saying that Large leverage funds unravel transactions after damage. When this is done, the market will calm downhe said. “I think there is nothing systemic in it – I think it’s an uncomfortable but normal dele of bonds,” Bessent said.
An auction of 30 -year bonds yesterday, April 9, 2025, also saw investors pay debt of $ 22 billion, arguing that bonds continue to be attractive even during Selloff.
However, some have said that concerns about how harmful to President Trump’s duties for growth and inflation trigger a massive cash exit and pushes investors to even liquidate high quality assets.
“People are right to worry about this general financial management,” Durham said. But “it is not clear to me, at least not yet, that this is an episode where people especially punish US assets.”
This does not mean that markets behave normally. US shares have fallen 7% since Trump announced plans to increase duties in dozens of countries on April 2. Since then, instead of falling, the 30 -year yields have actually increased about 40 basis points, which contributes for the fifth time to data dating back to the 1970s.
The rise of returns jeopardizes Trump’s stated target of reducing taxes while holding the fiscal deficit and was at least partially behind his decision on Wednesday to announce a 90 -day pause on higher duties for dozens of countries.
“Long -term interest rates are rising, even when the stock market is moving downwards,” Samers, who is also a paid Bloomberg partner, wrote this week. “We are treated by global financial markets as a problematic emerging market,” he said, adding that “this could cause all kinds of vicious spirals, government debt and deficits and dependence on foreign buyers.”
If Foreign investors decide to continue to retreat from US assets, pain can be important. Maintain about 7 trillion. dollars in bonds (out of a total of € 36 million), 19 trillion. Dollars in shares and 5 trillion. dollars of corporate debtrepresenting about 20% to 30% of the total market, according to Torsten Slok, head of Apollo Global Management.
If recent history is a guide, a “attitude” of buyers can have long -term impact on US borrowing costs.
Just three years ago, the boost of investors against non -funded tax reliefs of the UK Prime Minister, Liz Trars, fueled a rise in returns from which the country has not yet recovered, and the pound has never recovered from the 2016 Brexit vote.
“There is a disbelief from the market created by On-Off invoices, and this is definitely adding an insurance premium,” said Shamil Gohil, a portfolio manager at Fidelity International. “Large budgetary deficits will lead to constant concerns about debt sustainability that will probably require a risk insurance premium for maintaining bonds.”
Nathan Thow, senior portfolio manager at Manulife Investment Management, said treasuries are still dominating world markets in quality and depth, but acknowledged that recent events have weakened investor confidence.
“Much of the challenge we have seen in the last decade was the dynamics of politics or the geopolitical momentum that led outside the United States,” he said. “It is a different momentum this time, which makes people less confident about US assets, both on the part of the same capital and on the part of the fixed income. There was probably some permanent damage. “
It is also different this time because the Fed, worrying about how duties could trigger a rise of inflationit is less likely to rescue the bond market by reducing interest rates soon.
“You can’t rely on” long -term bonds as a risk compensation, “said Russell Brownback, a portfolio manager at Blackrock. “This is the fixed income regime we are in now.”