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Bond rout starting to sound market alarm bells

reuters.com

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Re: Bond rout starting to sound market alarm bells

#31

Post by mdemare »

ENGNR wrote: post #18
zmmmmm wrote: post #11

It seems to me the core issue at hand is that Trump has made a grave strategic error in terms of who really holds more cards in the trade battle, specifically with China. This bond lever - the threat to abruptly shut off US debt supply - is just one of them. But China can also simply manage far more easily without US imports than the US can manage without Chinese imports. And for any given pain threshold, China can b…

Possibly true. China has had net positive tariffs against the USA for decades though. Obama tried to use the WTO to label them as a currency manipulator. Trump tried some tariffs the first time around but they just raised theirs higher to keep the imbalance. Not saying the current strategy is a good one. But America has lost the entire supply chain, racked up huge debts, and a dollar that encourages more and more con…

If you want less consumption, and pay off debt, maybe ... raise taxes?

Re: Bond rout starting to sound market alarm bells

#32

Post by sanp »

zmmmmm wrote: post #11

It seems to me the core issue at hand is that Trump has made a grave strategic error in terms of who really holds more cards in the trade battle, specifically with China. This bond lever - the threat to abruptly shut off US debt supply - is just one of them. But China can also simply manage far more easily without US imports than the US can manage without Chinese imports. And for any given pain threshold, China can b…

He has bankrupted a few casinos. So, he is pretty good at poker.

Re: Bond rout starting to sound market alarm bells

#33

Post by rebuilder »

instagraham wrote: post #26

At what point do investors lose confidence that the US govt will be able to make these bond payments in 10 years? Whatever was considered 'business as usual' through decades of republican/democratic presidents is chucked to the bin now.

The US can always pay their dollar-denominated debt by printing more dollars. It wouldn’t be a case of being unable but of being unwilling to pay.

Re: Bond rout starting to sound market alarm bells

#34

Post by codingbot3000 »

intended wrote: post #21

There are several things at play. 1) Trump is playing a storyline. The Market place of ideas in America has one side which is under a monopoly. It sets its own prices, decides what information enters and exits, decides what the market SHOULD look like. It manages half the voting population. This is why “Trump does what he says” resonated. Previous lawmakers played the role on TV, but in back room deals, acted as if r…

One hole to poke into it ;-) There is the growing class of the working poor in the US, and that is something the better off seem to have been ignoring for a while. What I try to say is, that even the status quo ante Trump politics were already quite disconnected from most people's reality. Now Trump's new politics are different in that they negatively impact rich people's reality.

Re: Bond rout starting to sound market alarm bells

#35

Post by procaryote »

rebuilder wrote: post #33
instagraham wrote: post #26

At what point do investors lose confidence that the US govt will be able to make these bond payments in 10 years? Whatever was considered 'business as usual' through decades of republican/democratic presidents is chucked to the bin now.

The US can always pay their dollar-denominated debt by printing more dollars. It wouldn’t be a case of being unable but of being unwilling to pay.

of course, losing confidence that the dollar denominated payments will be worth anything near what you expect in non-dollars is functionally very similar to losing confidence that they'll pay

Re: Bond rout starting to sound market alarm bells

#36

Post by pwatsonwailes »

pjc50 wrote: post #27
procaryote wrote: post #14

Earlier quoted context omitted.

It's interesting that conspiracy theorists nowadays are looking for hidden plans for how the government might be working in our best interest, in spite of appearances

The weird thing is how conservatives get to play both the "federal government is inherently evil" and "look at all the stuff we're doing with our power over the federal government" cards at the same time, often for the same events.

Not mutually exclusive. "We're incredibly powerful and government is evil" and "we're absolutely going to use governmental power now we have it to fuck shit up that we don't like", is totally a position those in government can take.

The key is in the idea of governance and who's governing. Any and all governance which has happened by those the people in power don't like (basically the other team) is what is labelled bad.

The only question is, ultimately, is their governance sane and sensible? From the perspective of the greatest good for the greatest number of people.

And no. No it isn't.

Re: Bond rout starting to sound market alarm bells

#37

Post by jajko »

re-thc wrote: post #28
zmmmmm wrote: post #11

It seems to me the core issue at hand is that Trump has made a grave strategic error in terms of who really holds more cards in the trade battle, specifically with China. This bond lever - the threat to abruptly shut off US debt supply - is just one of them. But China can also simply manage far more easily without US imports than the US can manage without Chinese imports. And for any given pain threshold, China can b…

> error in terms of who really holds more cards in the trade battle, specifically with China. This isn't 1v1 though. Maybe there was a time when US vs the rest would work, but now? The problem is this isn't about import / exports of physical goods. Once tariffs and bans happen on digital goods, services, etc the US is toast. Has Trump forgotten about them? China is already onto things like US films. Game studios, Dis…

I can imagine Amazon's AWS (or MS, Google etc) can be banned in Europe in same way Huawei tech was banned. That will hurt US economy.

Even if local alternatives may be lacking now, we can subsidize them for some time so they grow on scale, and thats more than enough for us, we don't need to be cheapest on the market. If we are reliable rest of the world will come to us too. Don't forget US vs EU are 2 mammoth +-comparable economies, and EU has more 100 million additional citizens.

4D chess move would be banning for example ASML machines for any US-related business, let's see how orange man handles his emotional swings.

This is all just a tremendously stupid set of moves. The problem is, people in current US power circles are visibly not smart, you can see it daily. So they inevitably fuck up things, and with massive moves massive fuckery flies to all of us. There is almost 0 chance things will end up as they are publicly spoken of - there are 2 options, dumb as fuck as I wrote or actually some sort of nefarious plan for trump's clan and cronies to get massively richer and suck a lot of money from markets and everybody and their pensions.

Actually I hope its the latter, smart evil can be somewhat reasoned with, pure dumb arrogance not so much you just have to keep licking that ar*ehole and pray for the best.

Re: Bond rout starting to sound market alarm bells

#38

Post by optimalsolver »

sanp wrote: post #32
zmmmmm wrote: post #11

It seems to me the core issue at hand is that Trump has made a grave strategic error in terms of who really holds more cards in the trade battle, specifically with China. This bond lever - the threat to abruptly shut off US debt supply - is just one of them. But China can also simply manage far more easily without US imports than the US can manage without Chinese imports. And for any given pain threshold, China can b…

He has bankrupted a few casinos. So, he is pretty good at poker.

Bankrupting a business where you have a mathematically insurmountable edge is actually impressive.

Re: Bond rout starting to sound market alarm bells

#39

Post by milesrout »

pjc50 wrote: post #27
procaryote wrote: post #14

Earlier quoted context omitted.

It's interesting that conspiracy theorists nowadays are looking for hidden plans for how the government might be working in our best interest, in spite of appearances

The weird thing is how conservatives get to play both the "federal government is inherently evil" and "look at all the stuff we're doing with our power over the federal government" cards at the same time, often for the same events.

What a stupid strawman. The claim is "the government is too powerful, that power is easily abused, it wastes your money on pointless 'woke' things, and we are cancelling it all".

Re: Bond rout starting to sound market alarm bells

#40

Post by Ekaros »

pjc50 wrote: post #22
simmerup wrote: post #19

Earlier quoted context omitted.

Low interest rates isn’t in the common persons interests, it’s in the interests of those who own and those who have relationships with people close to the money faucet

Low rates very much in the interests of people who want to get mortgages. (Interestingly, because of the very long mortgage duration, US homeowners are very insulated from interest rate shocks. But it will show up in consumer credit, car payments etc.) Low rates are also expansionary for the economy in general.

Actually I think moderate rates are best for mortgages. Low rates just push prices and thus down payments to sky as have been seen. And that is no good. Moderate rates keep prices at cost of building. In the end monthly payment is what matters.
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