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This is all correct, but it's a first principles explanation that doesn't explain why US bonds, and in particular the 10-year note, spiked today. Yes, eventual
by ajross 2y ago
This is all correct, but it's a first principles explanation that doesn't explain why US bonds, and in particular the 10-year note, spiked today. Yes, eventually excessive tariffs would have that result. They literally hadn't even taken effect yet. So this doesn't explain the bond motion today.
Someone was dumping, we don't know who or why. But the answer to that question is a lot (a lot) more important than people realize, and certainly more so than the immediate market motion or tariff policy.
Honestly if the answer was "The PRC was unloading bonds to send a message" that's sort of the best option, as they have limited wiggle room to continue to do so without wrecking their own financial situation.
If it's "The market as a whole lost confidence in US debt", then we're fucked no matter what Trump does next.
- bilbo0s 2y agoHmm. The problem is that China holds only 2.6% of US Debt as of February 2025. Can they leverage that small a percentage to make a market move like that? Especially assuming they didn't dedicate all of their holdings to that action?
- ajross 2y agoIt depends entirely on what the trading volume is, and I don't know. But again IMHO it's critically important that someone find out.
- intended 2y agoYou know what the answer is. It’s the global system dumping US debt. Its not like someone knew THIS would be the specific smoke signal that Trump would see and say “oh, lets pump the brakes”
- scotty79 2y agoReversing idiotic decisions after not being able to explain away the backlash they caused is kind of his thing and many people recognized it and expected it before the tariff pause.
- deleted 2y ago[deleted]
- sdenton4 2y ago"someone"... Or lots of people looking at US stupidity and deciding that their long term bonds were suddenly looking like a bad investment.
- disgruntledphd2 2y agoThe FT reported that lots of hedge funds were unwinding a bunch of trades as they needed liquidity.
- ladyanita22 2y agoIt's heavily rumored it was Japan. https://x.com/Nihonpolitics/status/1910096159835594786?t=RWBbJ9x3sFoePLH3KI59IA&s=19 https://x.com/Nihonpolitics/status/1910096159835594786?t=RWB...
- gehwartzen 2y agoI think it’s largely irrelevant now. The cats out of the bag and any country holding large amounts of t-notes and facing hostility from the US will dump them to get Trump to back off.