Normally, investors rush into Treasurys at a whiff of economic chaos but now they are selling them as not even the lure of higher interest payments on the bonds is getting them to buy. The freak development has experts worried that big banks, funds and traders are losing faith in America as a good place to store their money.
“The fear is the U.S. is losing its standing as the safe haven,” said George Cipolloni, a fund manager at Penn Mutual Asset Management. “Our bond market is the biggest and most stable in the world, but when you add instability, bad things can happen.”
That could be bad news for consumers in need of a loan — and for President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets.
This is arguably bigger news than the stock market.
Waaaay biger news
Can’t fund that big bad military when all those dollars go to pay off those bonds.
I sold some bonds 3 days ago. I just don’t trust this administration won’t default on something in the next 6 months. Or do something else to drop out AAA rating.
Yeah, I’ve been trying to figure out what to do rather than just holding cash (cause inflation is likely to go up). But bonds don’t feel safe, I think the best bet is looking to assets outside the US, but that’s exactly what this article is calling out, the US doesn’t feel safe anymore.
I’m debating precious metals or possible even Bitcoin since that’ll probably get pumped by the admin announcing the government buying it. Problem is they might try and sell off gold to do it which would probably drive down the price of that.
But I’m sure there won’t be any insider trading of those before it happens /s
I know this is the kind of hyperbole that leads to markets crashing spectacularly, but honestly, sell your bonds, get the fuck out of the U.S., this place is cooked. DO NOT RELY ON THE U.S. FOR ANYTHING IMPORTANT for the foreseeable future.
Centrists strangled any hope of mitigating this disaster by spending all the democrat/left’s political capital on meaningless handwringing about the parlimentarian saying no to higher minimum wages and whether well should we be so radical so as to suggest free healthcare… and well should we really keep feeding the poor isn’t that handouts?
Now centrists in U.S. culture learn why the leftists they have been angrily tone policing for being too negative where just describing in a sad voice the future that was heading for us like a freight train, covered in fascists hooting and hollering.
It is going to be bad, and I am very sad.
It definitely is. If bonds don’t sell, or at least no longer sell cheap, then the US might get bigger problems with their budget.
republicunts plans to finance rich people tax cuts with additional debt in shambles
i heard this was thier lynchpin to fund the tax cuts?
If US Bonds are no longer the de facto safe haven asset…
The USD is no longer the world’s de facto reserve currency.
That means that even if all the tariffs were rescinded, Trump croaked and somehow JD Vance took a ‘be at least somewhat more competent and less stupid’ pill, and never reinstated them…
Well it would mean the dollar would crash against other currencies, we wouldn’t be able to import anywhere near as much, and US international debt payments as a percentage of the yearly budget would climb fast.
… And then that could spiral into both massive austerity at home, and/or ‘lol we are defaulting on our international debt’ either by formal declaration, or… basically hyperinflation.
That means that even if all the tariffs were rescinded, Trump croaked and somehow JD Vance took a ‘be at least somewhat more competent and less stupid’ pill, and never reinstated them…
It’s too late for that. The US has shown that any appearance of stability can be upended at the whim of whatever singular person is president at the time, and there are no systems in place to prevent that. The idea of “checks and balances” has been shown to be a lie.
Trump signed a trade agreement with Canada and Mexico last time he was president and immediately violated them at the start of this term. He’s been constantly back and forth on tariffs with no warning. The word of the US has become completely worthless.
It doesn’t matter if all Republicans suddenly realize “this is bad”, remove Trump, and put someone stable in his place. The world had been shown that regardless of how stable the current president is, in 4 years the citizens could vote for a complete idiot (and I remind you Trump did win the popular vote. The citizens voted for this) and the market is in turmoil again.
Other countries aren’t unstable idiots of course and aren’t going to tear up existing agreements (because they value stability) but they sure as fuck won’t be renewing any contracts (at least not without far less favorable terms for the US and escape hatches incase another idiot is put in charge) and will be making contracts with other nations instead.
Trump has killed the US and a financial superpower, the US just doesn’t know it yet. It won’t be felt until existing contracts expire and new ones are signed.
No disagreements, no notes.
We (USians) are completely cooked, totally fucked.
We’d have to erect a new government, and then actually demonstrate stability for a decade or two… to begin to be able to undo Trump’s damage, to be treated as anything other than basically a rogue nation that also has the world’s… either the first or second largest/most powerful military.
I can only hope some more civilized places may begin to more seriously consider Americans seeking asylum… though I of course completely understand why they wouldn’t.
It’s the God damn mainstream propaganda media and the uneducated morons fucking shit up.
then u sell ur aircraft carriers and f35s lul
Oh sure, here, buy our aircraft carriers and aircraft that even we can barely understand our own logistics and and maintenance supply lines and procedures for, that will all nearly mmediately break if they stop getting software updates.
Like, I hear you lol, but its kinda like saying ‘sell your literally custom made hyper car that will depreiciate by 80% in value and the parts manufacturer will go out of business when you buy the car.’
I am saying you’d have to be an idiot at this point to buy one, we wouldn’t be able to sell them at this point.
Now I am all for downsizing the military in general, have been for basically all my life since middle school… but uh yeah, that would look more like decommissioning and downsizing.
But uh also also, the military industrial complex are basically the only domestic manufacturing jobs we really have, aside of our shitty overpriced domestically assembled but internationally owned and sourced consumer cars… and the Trumpublican party is, you know, in charge, what with the fascist coup and all that.
That’s not what happens in this scenario… Those aircraft carriers and F35s get activated.
For another victory in Afghanistan?
Hey.
HEY!
There are a lot of penguins on some godforsaken island in the middle of nowhere that need to be bombed until they understand democracy and freedom.
(‘freedom’ and ‘democracy’ subject to terms and conditions, limited time offer, no refunds)
You sound smart.
You can pack your stuff and see yourself out or you can roll the dice with our staff of 19 year old tuff bois.
Roll the dice huh?
You know, I’m actually really into TTRPGs… and I actually keep my a few of my dice on me as a sort of silly good luck charm, here, lemme show you!
rolls for initiative in my own mind
reaches into jacket, draws concealed pistol
Bond sales are only politically connected to the budget; not financially. Not selling bonds would in no way hinder congress from passing a budget.
Not really. US debt is held in those bonds, and it is a perpetual game of selling and repaying them. If they don’t sell anymore, the old ones have still to be repaid - or default. You don’t want to experience this.
The “debt” of a monetarily sovereign state is really nothing like the debt of a household or business. The US could pay off all its debt in an instant by an act of Congress. Not saying that would be a good thing, but there are no financial constraints stopping Congress from doing that; only political ones.
The US could pay off all its debt in an instant by an act of Congress.
Yes, of course it could. But then, nobody (except maybe some terminally stupid MAGA-heads) would ever lend the US any money. The treasurey could mint a bunch of trillion dollar coins to the same effect, so congress would not be needed. But the (devastaing) effect would be the same.
This does not mean I would put such a dumb move beyond Trumps reach. Big photo op, “See, I’ve eliminated the whole national debt with a stroke of my sharpie! Biden was too stupid to do this!”
I’m no expert but it seems to me if the yields have to go up to get buyers, it’s like raising the interest rates on a loan. You can still get the loan but you have to buy less car/house if you want to afford the payments.
You’re mostly right.
Most T Bills and Bonds… they don’t work like a credit card or a home loan.
Those are things you pay a bit on every month, and the interest rate is an APR, which means Annualized Percentage Rate, which means the monthly interest rate you are paying is the APR divided by 12.
So with those, the bank gets money every month untill you pay it all off.
With Bonds… say a 5 year Bond… you pay for the Bond, newly issued by the US govt, and 5 years later, you hand it back to them, and they pay you the face value + interest rate.
But, people who have already bought a bond, well they can sell it again, before it matures, to… some other guy, some other country, some other firm.
Thats called the ‘secondary market’, and most of the time you hear a news story about bond prices and yields, its a second party selling a bond to a third party.
Generally, when the US does an issuance auction of new debt directly… well, it has to generally track the prices and yields set by the various secondary markets, sorta like how you’d wanna check a car salesman’s price against kelly blue book to make sure you’re getting a reasonable deal.
There were moments in thr GFC, 07 08 09, where US debt auctions … didn’t actually result in the amount of bonds expected to sell, actually selling, because there were enough potential bond buyers who assessed that the US was offering unreasonable prices and yields, given the economic turmoil.
… I am not an ‘expert’ either, but I do actually have a BSc in Econ, and I apparently remember a good deal of my courses, and enjoy infodumping lol.
Thank-you for your info dump :)
Yay, validation lol!
There are two different kinds of bonds, you described the couponless bonds, but most bonds pay a coupon. We are responsible for paying interest on those bonds bi-yearly. It’s an important part of the trade dynamic because the bonds can be traded for USD and produce USD for the older. If there is no international trade there’s no reason for them to hold our bonds.
So just to help your example most people are looking for the cashflow. They give the US $1,000 and they want the $40 a year. They can then use the 40$ a year to exchange for goods and services without having to shuffle around much money. Since banks, countries and industrys are tied to this income the threat of default is truly a global wrecking ball.
Ah, ok, I appreciate the correction!
Doing my best trying to remember my course work from almost two decades ago, looks like I missed an important detail.
… and that detail makes the situation… even worse, wonderful.
You we’re pretty much right on the money. I think the Zero Coupon bonds are more of a hedgefund favorites. Your average investor is going to be holding the couponed version in their 401k.
The prices and yields of bonds have an inverse relationship:
If price goes down, yield goes up.
The yield is also known as the interest rate.
This interest rate * the purchase price is paid by the US government to the bondholder at the end of the duration of its term.
When you look at the US Federal budget, and see the amount that goes toward making debt payments…
This, bonds, are a very big part of what you are looking at.
If the interest rate on US debt instruments are going up… that means more and more of the budget has to be allocated toward debt repayment.
While yes, extremely directly, bond yields rising doesn’t… mechanically make the passing of a budget impossible in some kind of procedural way…
It very much makes the stakes higher as now our growing debt problem is growing even faster.
This is by design. They want to destabilize the US. There is a lot of money and influence in it for them
Not if it collapses as fast as it looks like it will!
Preventing this was originally what people thought was causing him to pause
Well I mean… Gestures at everything
I know that my quality of life is likely to tank in the coming years, and if it doesn’t it is because I got lucky where others didn’t, but damn is it hilarious seeing how fucking stupid centrist business bros and tech people are in the U.S. right now, they are JUST NOW realizing the boat is sinking, when only half of the boat is still above the water… it is fucking hilarious honestly and I don’t take joy in this happening, I mean I do, but I am not happy it is happening I am rather so sad that if I don’t laugh about it all I will do is cry.
raises fear that confidence in America is fading
Just now that fear is being raised?
“The fear is the U.S. is loosing its standing as the safe heaven” ? Looking at it from the E.U., it’s already gone with no going back. The U.S. looks more and more like a self destructing failed state, that only needed a little nudge from foreign troll factories.
I mean they voted for a criminal. So yeah.
Oh come on, “Freak” sell off makes it sound like there’s some mystery as to what caused this when it’s blindingly obvious what the problem is here. The markets, and far more importantly all decent and rational people throughout the world, won’t and shouldn’t have any confidence in anything as long as Donald Trump is president. The only thing that starts to fix this mess is his resignation or impeachment (and that is only a start, investigations criminal charges and sentences amendments to laws etc. all need to happen too).
The only thing that starts to fix this mess is his resignation or impeachment (and that is only a start, investigations criminal charges and sentences amendments to laws etc. all need to happen too).
Or removal by other means.
Not happening, so I’d plan accordingly.
since impeachment happened twice with trump, with no convictions, only for show and sound bites for MSM, its unlikely he will get charged or sentenced at all.
How’s the market for booze, bullets, and bread going?
Don’t know about booze, bullets and bread, but there does seem to be alot of folks taking up smoking again. Altria stock has shot up like a rocket over the last 12 months.
Huh. I don’t know anything about Altria. Wonder if they’re capitalizing on nicotine packets and vapes.
They are, among every thing else tobacco related.
They are, to the tobacco industry, what TTI is to power tools. Among the companies they own are Philip Morris (Cigarettes, Cigars and pipe tobacco), US Smokeless (dip, snuff and whatnot), and NJOY (vaping).
Why would anyone still have faith in this country?
That’s how shit the rest of them are.
European markets and bonds seem to be catching a lot of the fleeing capital so… big doubt.
We were up 3-0 in the finals and blew the lead. Enjoy generations of poverty if your family can survive the great depression.
It’s more like we came out of WW2 up by 10 because the other teams got decimated. As the decades have gone on they’ve rebuilt their teams and scored some goals so while we kept scoring, they were catching up. This is actually the natural process where a rebuilt Europe was expected to eventually equal the US.
But Trump just blew up the scoreboard and now everyone is wondering if we’re even still playing the same game.
The US was just the latest to take advantage of a disaster. Not too long before the Nazis tried to kill all the Jews were americans trying to kill all the native americans, as well. I’m not sure america has done any good as a country in a long while.
I didn’t say they did?
Flour sack dresses are so in
People from the U.S. (and even parts of Europe) do not understand how corrupt, stupid, and unstable majority of the world is. It is genuinely unfathomable.
This does not excuse the fascism of the current admin, nor the war-crimes of the U.S. as a whole, but they are nowhere even remotely close to the likes of Moldova.
Yup. US dollar is not the reserve currency because it’s attractive. It is the reserve currency because there simply is no alternative. There simply is no asset that can hold hundreds of trillions of dollar.
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if I were to move to Europe and get the exact same job and free Healthcare, I’d be making a fraction of what I do now.
facepalm dawg you can’t just compare how much you make in the two places, how do you quantify the stress that comes from never knowing if medical problem is going to end your life… because it will bankrupt you and your family not because it will kill you directly?
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If you are a millionaire already why stay here?
No I just didn’t realize how naive you were about your privilege.
Nothing will meaningfully improve until the rich fear for their lives
Desperation is unlikely to produce meaningful improvements
Why not?
We got powerful armed unions after the Ludlow massacre/10 day war, and workers rights/min wage/40hr work week after triangle factory fire and the ensuing riots.
Blacks got the right to vote after the death of MLK and the ensuing riots and organized violence of the Black Panthers.
It’s sad how suppressed our educations are in this police state of a country.
Yes which is why warfare is a struggle where you make your enemy so completely devoid of any desperation that they cannot fight anymore.
Can’t believe the president who has repeatedly floated the idea of defaulting on government debt to save money would provoke this response.
Google searches for stable foreign bonds skyrockets
There’s a reason for that. Maybe if all those well-off bankers hadn’t thrown in with trump in hopes of deregulation their portfolios would still be slowly climbing up with the DJIA under a democrat instead of flopping around like a fish out of water under trump.
Shoots market in the dick
“Don’t worry folks, all part of the plan”
Puts bandages on market
“There, good as new”
As a guy who thought about buying bonds recently and decided to go to gold instead, my thinking was that Trump and/or Elon could definitely make some attempt to steal/divert treasury bonds, hold bonds hostage for some change he wants, or some other fuckery. The US can’t go bankrupt - so long as you can trust the leaders to do the most basic rational things. But you can’t trust them to do that right now.
If the US loses it’s Reserve Currency status because too many international investors are existing it, more printing will directly translate to Inflation.
So whilst technically the US can’t go bankrupt, it most certainly can end up with Hyperinflation and all its problems if the printers start going full steam (metaphorically speaking, since nowadays most currency is digital) to stop the bankrupting of the US following Trump/Musk fuckery and foreigners (as well as larger local investors) refuse to buy those new Dollars and actually accelerate their the exiting from positions in USD (and that’s not just going to be cash positions but also USD-Denominated assets such as Stocks, Bonds and Treasuries) which seems to have been started happening already judging by news such as this.
I’ve stopped assuming these guys will account for facts, nor that they keep the “no” finance guys around when making decisions.
I think 100% of decisions are made by Trump in the Oval Office based on the object permanence of the last person or tweet he’s seen.
Oil being priced in dollars is a primary driver of why other countries need to buy dollars. I’m worried we’re about to find out what happens when OPEC decides to start allowing oil to be traded in euros or yuan.
