- Mar 11, 2015
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The fact that people are now selling U.S. Treasury bonds means that the dollar is being weakened by Trumps policies. That is affecting our economy and not in a good way. We didn't have this during Biden and it would not have happened under Harris.
As Treasury bonds are unloaded, the yields on 10-year Treasurys jumped overnight and briefly hit 4.5 percent, before receding somewhat. The yields on these bonds are important because they help determine what millions of consumers and businesses pay to borrow.
Global investors typically move to the perceived safety of U.S. debt in times of market tumult. But the jump in yields raises fears about whether investors are beginning to question U.S. debt as a haven.
In a research note, Gillum said the larger cause is probably yet another culprit: the unwinding of the “basis trade,” in which hedge funds take advantage of tiny pricing differences between Treasury bonds and Treasury futures contracts.
Still others fear that the rise in yields is so significant as to raise concerns about how foreign investors now perceive the United States after Trump imposed vast new tariffs. The U.S. enacted a 10 percent baseline tariff on all imports from virtually all countries over the weekend — plus an additional punitive import tax tailored for each of about 60 countries, with duties on Chinese goods raised 104 percent Wednesday. China quickly responded with an 84 percent duty on all U.S. goods and has said it won’t back down.
Krishna Guha of Evercore ISI noted that the reduced global demand may in part relate to the risk of stagflation — the possibility of high inflation and low growth in the U.S. But, he said, it seems more driven by a loss of confidence in U.S. decision-making, reduced attractiveness of dollars when the U.S. is destroying the existing geopolitical and economic order it created, as well as other factors.
This ain't winning.
U.S. Treasury bonds are being sold off. Here’s why it’s concerning.
A week into President Donald Trump’s global trade war that has upset financial markets, a new unsettling red flag is hitting the financial system: People are selling U.S. Treasury bonds.As Treasury bonds are unloaded, the yields on 10-year Treasurys jumped overnight and briefly hit 4.5 percent, before receding somewhat. The yields on these bonds are important because they help determine what millions of consumers and businesses pay to borrow.
Global investors typically move to the perceived safety of U.S. debt in times of market tumult. But the jump in yields raises fears about whether investors are beginning to question U.S. debt as a haven.
What is happening?
People around the world are selling U.S. Treasurys, which is very unusual when the stock market tanks. Generally when stocks lose value, investors have moved money into the bond market.Why is this happening?
There could be several reasons for the jump in yields, from potential boycotts by foreign buyers retaliating against tariffs to investors “rebalancing” their portfolios by selling Treasury bonds for cash, according to Lawrence Gillum, chief fixed-income strategist for LPL Financial.In a research note, Gillum said the larger cause is probably yet another culprit: the unwinding of the “basis trade,” in which hedge funds take advantage of tiny pricing differences between Treasury bonds and Treasury futures contracts.
Still others fear that the rise in yields is so significant as to raise concerns about how foreign investors now perceive the United States after Trump imposed vast new tariffs. The U.S. enacted a 10 percent baseline tariff on all imports from virtually all countries over the weekend — plus an additional punitive import tax tailored for each of about 60 countries, with duties on Chinese goods raised 104 percent Wednesday. China quickly responded with an 84 percent duty on all U.S. goods and has said it won’t back down.
Krishna Guha of Evercore ISI noted that the reduced global demand may in part relate to the risk of stagflation — the possibility of high inflation and low growth in the U.S. But, he said, it seems more driven by a loss of confidence in U.S. decision-making, reduced attractiveness of dollars when the U.S. is destroying the existing geopolitical and economic order it created, as well as other factors.
This ain't winning.
