They’ve grumbled about it, but their total tbill holdings are up. The general assumption right now seems to be that Trump is going to capitulate and so, at least right now, it’s all just people making noise to make it happen. The numbers show that foreign entities are still comfortable holding US debt.
Consensus is still that that’s the hedge funds unwinding their bond holdings to cover stock losses. The bond sell off might also be interpreted as a reaction to the fact that inflation is still high and the difference between bond yields and inflation has been low lately. Also, if you look at more recent data it looks like rates have started cooling off again: https://tradingeconomics.com/united-states/government-bond-yield
This graph also illustrates that Japanese bonds also appear to be selling off, so if the government is pulling out of US bonds, it’s not going toward domestic bonds, which is interesting.
Like I said it’s volatile and highly dependent on what crazy thing Trump says day to day. However, the volatility itself is precisely what drives the demand for US bonds down in the long term. Ultimately, buying of bonds is based on confidence that US economy is going to be stable, and right now that very much doesn’t look to be the case.
I don’t think it’s that surprising that Japanese aren’t doing well either since Japan’s economy is highly dependent on US as well.
Yeah, I don’t disagree on the fundamentals, my point is just that for now the crisis doesn’t appear to be extended to the government itself. I think this is a sign that, headlines notwithstanding, the dominant thinking is still that the status quo is going to hold in the near term, even if it is accelerating the loss of the US’s influence on the global financial system in the long term.
That’s fair, the idea that US economy might be imploding is still very difficult for people to swallow, and it’s probably gonna take some serious shocks before real dumping begins.
Despite initially buying into it, I don’t think the implosion is a given at this point. It’s not really in your interest to dump an asset that you’re holding a lot of, it’s better to sell quietly so no one else notices that people are edging out the door. But besides the fact that the data is public and available, what do you move your stuff into? Gold? Your own bonds? Other foreign bonds/currencies? There isn’t really a good backup safe haven, so I imagine what we’re seeing right now is people a rush to figure it out quietly.
It’s entirely possible that the looming supply shock hits the US and the government’s attempt (or lack thereof) to respond to it is what finally causes the fireworks, but it’s also possible someone near Trump talks some sense into him, he talks to China and they extract some mild concessions, and the ships start sailing again. People can tolerate a month or two of shortages more than they can tolerate indefinite shortages. Who knows, though? That’s the fun of living in an economy balanced on a knife edge by a dementia-addled blob of seemingly-sentient adipose tissue.
They’ve grumbled about it, but their total tbill holdings are up. The general assumption right now seems to be that Trump is going to capitulate and so, at least right now, it’s all just people making noise to make it happen. The numbers show that foreign entities are still comfortable holding US debt.
It’s a volatile situation, here’s a newer article https://www.bloomberg.com/news/articles/2025-05-01/foreign-funds-sour-on-us-corporate-bonds-as-trump-sows-chaos
That one’s about private corporate debt, not US government debt.
government bond sell off is happening as well as seen with yields here
https://www.ft.com/content/0005e091-930d-46ff-9e81-8591704a9282
Consensus is still that that’s the hedge funds unwinding their bond holdings to cover stock losses. The bond sell off might also be interpreted as a reaction to the fact that inflation is still high and the difference between bond yields and inflation has been low lately. Also, if you look at more recent data it looks like rates have started cooling off again: https://tradingeconomics.com/united-states/government-bond-yield
This graph also illustrates that Japanese bonds also appear to be selling off, so if the government is pulling out of US bonds, it’s not going toward domestic bonds, which is interesting.
Like I said it’s volatile and highly dependent on what crazy thing Trump says day to day. However, the volatility itself is precisely what drives the demand for US bonds down in the long term. Ultimately, buying of bonds is based on confidence that US economy is going to be stable, and right now that very much doesn’t look to be the case.
I don’t think it’s that surprising that Japanese aren’t doing well either since Japan’s economy is highly dependent on US as well.
Yeah, I don’t disagree on the fundamentals, my point is just that for now the crisis doesn’t appear to be extended to the government itself. I think this is a sign that, headlines notwithstanding, the dominant thinking is still that the status quo is going to hold in the near term, even if it is accelerating the loss of the US’s influence on the global financial system in the long term.
That’s fair, the idea that US economy might be imploding is still very difficult for people to swallow, and it’s probably gonna take some serious shocks before real dumping begins.
#NothingEverHappensGang.
Despite initially buying into it, I don’t think the implosion is a given at this point. It’s not really in your interest to dump an asset that you’re holding a lot of, it’s better to sell quietly so no one else notices that people are edging out the door. But besides the fact that the data is public and available, what do you move your stuff into? Gold? Your own bonds? Other foreign bonds/currencies? There isn’t really a good backup safe haven, so I imagine what we’re seeing right now is people a rush to figure it out quietly.
It’s entirely possible that the looming supply shock hits the US and the government’s attempt (or lack thereof) to respond to it is what finally causes the fireworks, but it’s also possible someone near Trump talks some sense into him, he talks to China and they extract some mild concessions, and the ships start sailing again. People can tolerate a month or two of shortages more than they can tolerate indefinite shortages. Who knows, though? That’s the fun of living in an economy balanced on a knife edge by a dementia-addled blob of seemingly-sentient adipose tissue.