Utopia Talk / Politics / US bonds getting dumped

williamthebastard Member	Wed Apr 09 10:34:26 BONDS Bonds crater, 10-year yield briefly spikes above 4.5% in confounding move that’s worrying Wall Street US10Y +0.151 (+3.5446%) US2Y -0.002 (+0.0039%) Traders work in the S&P 500 Index (SPX) options pit at the Cboe Global Markets exchange in Chicago, Illinois, US, on Tuesday, April 8, 2025. S&P 500 intraday volatility is the highest since the Covid 19 pandemic, with swings accelerating amid a barrage of headlines on the economy and tariffs. The bond market — not a plunging stock market — is the talk of Wall Street Wednesday with prices tumbling and yields spiking, unusual action during times when fears of a recession are growing and fixed income is usually relied on as a safe haven from turmoil elsewhere. The 10-year Treasury note yield jumped 11 basis points to 4.37% and at one point overnight climbed above 4.51%. The yield has rebounded beyond where it was the day before President Donald Trump’s tariff plan was unveiled last Wednesday and is currently at the highest since February. As recently as last week, the 10-year yield, which helps decide rates on mortgages, credit card debt and auto loans, was below 3.9%. The 30-year Treasury bond yield hit a high of 5.02% overnight, a level not seen since November 2023. The 2-year Treasury yield rose 2 points to 3.76%. One basis point is equivalent to 0.01%. Yields and prices move in opposite directions. hide content U.S. 10 Year Treasury RT Quote | Exchange 4.411% quote price arrow up+0.151 Yield | 11:33 AM EDT WATCHLIST + QUOTE DETAILS 10-year Treasury yield Trump’s next set of tariffs kicked in overnight, sending the rate on goods imported from China to 104%. China then retaliated early Wednesday, further embroiling the globe in trade turmoil. The White House trade fight with the rest of the world has driven equity prices lower, with the S&P 500 losing 12% in just four trading days amid growing worries the president’s policies are helping to trigger a recession. A market sell-off and rising concern that the economy is headed for a downturn would normally cause investors to flee toward bonds in a search for safety, driving yields lower. But that hasn’t happened. US10Y U.S. 10 Year Treasury 4.411% +0.151 US1M U.S. 1 Month Treasury 4.315% -0.008 US1Y U.S. 1 Year Treasury 3.907% +0.032 US2Y U.S. 2 Year Treasury 3.736% -0.002 US30Y U.S. 30 Year Treasury 4.872% +0.157 US3M U.S. 3 Month Treasury 4.338% +0.044 US6M U.S. 6 Month Treasury 4.147% +0.005 The iShares 20+ year Treasury Bond ETF (TLT) , a proxy for long-term bond prices, is down more than 6% this week. “Perhaps even more alarmingly, U.S. Treasury markets are also experiencing an incredibly aggressive selloff as we go to press, adding to the evidence that they’re losing their traditional haven status,” Henry Allen, a macroeconomic strategist at Deutsche Bank, said in a note. China and Japan selling? Traders are looking at a number of theories to explain the move in bonds, ranging from forced selling by hedge funds getting margin calls to more troubling speculation of foreign holders dumping U.S. government securities. A 10-year bond auction looms later Wednesday where the Treasury will seek to sell $39 billion. This follows a 3-year Treasury note auction Tuesday that saw weak demand. The largest holders of Treasurys — and potential bidders in these auctions — are Japan, China and the U.K., the very countries the U.S. has targeted with some of the highest tariffs. “This is a trade war and if countries can use their stock of U.S. financial assets that they’ve accumulated ... then they can create some problems,” said David Zervos, chief market strategist at Jefferies, on CNBC’s “Worldwide Exchange” Wednesday. Countries may have no choice but to own fewer U.S. government bonds if Trump is successful in shrinking the U.S. trade deficit, as that will result in Americans sending less money overseas to pay for goods. That means fewer dollars for countries to buy Treasuries. Backfiring on White House The move higher in yields is trouble for both the Trump administration and the Federal Reserve. The White House for a time could have taken solace that the tumultuous tariff rollout was at least lowering rates, providing a buffer for consumers. But then rates rebounded this week. “Trump administration officials have been taking credit for the recent drop in bond yields and mortgage interest rates,” wrote Ed Yardeni of Yardeni Research in a note Tuesday evening. “Unfortunately, the 10-year Treasury bond yield is up.” “Why is this happening? Fixed-income investors may be starting to worry that the Chinese and other foreigners might start selling their U.S. Treasuries,” added Yardeni. Meanwhile, the Fed may be hesitant to cut official lending rates, currently at 4.25% to 4.50% for fed funds, if tariffs around the world boost inflation. Its hand may be forced if rates continue to spike and recession fears grow. Even so, while a rate cut would affect short-term rates, it could backfire and fuel a bigger spike in long-term rates that are decided in the open market, as traders speculate a looser Fed will lead to even more inflation over the long term. http://www...h-new-reciprocal-tariffs-.html
williamthebastard Member	Wed Apr 09 10:36:05 Nobody knows quite what is going on, but they suspect China and Japan are beginning to dump their massive ownership of US bonds.
williamthebastard Member	Wed Apr 09 11:02:29 Meanwhile, the incoming German government is having meetings about whether to demand back their 1 trillion gold reserve. If Trump continues with his aggression there is a good chance they will. If the US refuses, we're entering a whole new level of conflict.
TheChildren Member	Wed Apr 09 11:18:24 wut gold lol last time they asked 4 a tiny portion back, it took 7 years in different gold bars... it obviously not there
williamthebastard Member	Wed Apr 09 11:27:23 They dont need actual gold bars, they just need USD 100b, which is less than the value of several countries' US bonds
Paramount Member	Wed Apr 09 11:35:31 ” If the US refuses” Then what? What is Germany going to do? lol
williamthebastard Member	Wed Apr 09 11:40:20 Then the entire world will cut off economic loans and agreements because the US will be seen as a thief, they can forget about the 10 trillion USD they need to borrow in the next 10 years, other countries will dump their US stocks, the US dollar wont be the currency reserve of the world anymore, the whole thing will escalate to where countries like Germany and its EUR 600b investment in rearming itself are pointing their arms not at Russia but at the USA and a million other ramifications
williamthebastard Member	Wed Apr 09 11:43:05 Germany might start seizing US companies in Germany etc etc etc
williamthebastard Member	Wed Apr 09 11:45:39 Im pretty sure that if theyre having meetings about whether to demand the money back, theyre discussing what to do if the US says no or just delays all the tim
williamthebastard Member	Wed Apr 09 11:49:18 Looking through a list of US companies in Germany, theyre worth well over 100b
williamthebastard Member	Wed Apr 09 11:54:34 Just McDonalds annual sales alone in germany are 7 billion, never mind Microsoft, Amazon and on and on and on. And thats just sales, never mind the property, inventory etc they own etc. Seize 7 -10 of the biggest US companies, and theyve got their money back
williamthebastard Member	Wed Apr 09 12:02:32 Amazon annual sales in Germany are 37 billion, they have an inventory of about 10 billion in Germany etc etc, probably very large amounts of money in German banks etc etc etc. Easy peasy.
williamthebastard Member	Wed Apr 09 12:06:54 Oh, and Germany owns almost USD 700b in US govt bonds which they would immediately dump (together with all the other democratic countries which collectively probably own around EUR 7-8 trillion)
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