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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

#51

Post by [deleted] »

codingbot3000 wrote: post #34
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.

[deleted]

Re: Bond rout starting to sound market alarm bells

#52

Post by ArtTimeInvestor »

jajko wrote: post #10
ArtTimeInvestor wrote: post #6

Earlier quoted context omitted.

Companies can operate and make profit Why make a profit? How is an Apple that gives billions of dollars to investors (many of them abroad) better for Trump than an Apple that gives those billions of dollars to the Government which he controls? Tariffs are one way to redirect those profits.

Apple has ~30% margin, so they will just increase prices. If real SHTF with sales (since iphone 16 has had lukewarm sales already and they have 0 new shocking transformative products), they can start chipping down that part, but its a long way to go to reach competition. Who pays for all this, as always, is common people, getting poorer. More specifically middle class, poor don't buy money-making devices from ie Appl…

Why do their 30% margin make you predict they will increase prices? What if they had 3% margin?

Re: Bond rout starting to sound market alarm bells

#53

Post by rich_sasha »

comrade1234 wrote: post #48

Just so I understand how this works… interest rates on these bonds are going up because of low demand for the bonds? How does this translate to interest rates set by the fed? Do these have to go up to match? .4%?

Fed sets up very short term interest rates - specifically, overnight lending.

It certainly affects longer-term rates, but only indirectly. In effect, the lending rate for 10 year bonds, say (a common benchmark duration) is set entirely by the market. These are closely related - they operate in the same space - but are in principle independent decision-makers.

As to bond yields vs bond prices, t is easiest to see for new bonds - sold directly by the US govt. Unlike consumer loans, with bonds you know exactly how much you get repaid - periodic coupon and maturity. The variable is the price today paid for the bond. The government hopes to achieve a high price, raising as much cash as it can today (for the same future repayment cash flow), i.e. a low interest rate.

If the buyers of bonds - lenders - show up in small numbers, there is weak demand to buy, and the bond price is low. This translates to a high rate of interest - for a smaller upfront loan, you get more repayment down the line.

The same mechanism works in secondary markets - bond owners trading with each other.

In terms of how this affects the decision-making by the Fed - in principle, not at all. Fed is free to do whatever the like. But in practice, Fed is bound by the same forces as the bond traders, and bond yields are going up suggests the Fed will likewise have to raise rates. Or bond yields go up in anticipation to the Fed having to raise rates, etc.

Re: Bond rout starting to sound market alarm bells

#54

Post by jajko »

ArtTimeInvestor wrote: post #52
jajko wrote: post #10

Earlier quoted context omitted.

Apple has ~30% margin, so they will just increase prices. If real SHTF with sales (since iphone 16 has had lukewarm sales already and they have 0 new shocking transformative products), they can start chipping down that part, but its a long way to go to reach competition. Who pays for all this, as always, is common people, getting poorer. More specifically middle class, poor don't buy money-making devices from ie Appl…

Why do their 30% margin make you predict they will increase prices? What if they had 3% margin?

Their stock would collapse, nobody in power there wants that.

Re: Bond rout starting to sound market alarm bells

#55

Post by leovingi »

re-thc wrote: post #47
leovingi wrote: post #45

Earlier quoted context omitted.

> factories with workers below the minimum wage China made that choice in the late 1970s and early 1980s and has progressed ever since and is now powerful enough to be able to stand up to the United States. You have a warped view of what manufacturing is and how it can be built upon that is closer to children's cartoons than reality.

> China made that choice in the late 1970s and early 1980s and has progressed ever since So you're saying that China has grew out of manufacturing because a lot of it is moving out of China. In the same way the US has also moved out of manufacturing ages ago. > is now powerful enough to be able to stand up to the United States How do you conclude that the ONLY thing China did is manufacturing? > You have a warped vie…

>China has grew out of manufacturing because a lot of it is moving out of China

China's Manufacturing Production [1] and Industrial Production has increased year-on-year for the past 10 years, excluding abnormal events such as Covid, so where are you getting your data? If you meant to say that they are transitioning to a higher level of manufacturing, instead of the sweatshops they were associated with in the 90s, this is true. But it was the low-level manufacturing that allowed them to build up both the capital and the skill necessary to advance further and further.

Hell, you've got a naval empire (the United States) that is currently unable to come even close to the Chinese ship-building capabilities - their output dwarfs the US by 232x [2]. It's not something that happened overnight and it's certainly not something that was strategically planned out 30 years ago - it is a slow process that started with low-level outsourcing and allowed China to grow into the behemoth it is today.

Sooner or later the US was going to have to deal with this fact and it seems like that time has come. Whether or not there's a plan, whether or not it will even work - I have no clue, you have no clue and neither does anyone on this forum.

Also, to counter another point you made - "When we talk about these trade deficits do we include streaming services, television shows, films, games and whatever else?" - you can't fight a war with an economy based on streaming services, TV shows and games.

[1] https://tradingeconomics.com/china/manufacturing-production

[2] https://www.americanmanufacturing.org/blog/chinas-shipbuildi...

Re: Bond rout starting to sound market alarm bells

#56

Post by joegibbs »

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…

I think Trump is kind of like a semi-fictional character: there’s the real guy and then there’s the character he played on shows The Apprentice which are all a bit scripted, in interviews etc as the larger-than-life successful businessman. People voted for the character. But when you play a character like that for your whole life then it becomes who you are, which is why he’d play the storyline.

Re: Bond rout starting to sound market alarm bells

#57

Post by bmicraft »

milesrout wrote: post #39
pjc50 wrote: post #27

Earlier quoted context omitted.

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".

If they're so concerned about abuse, why are they abusing it more than anybody else?

Re: Bond rout starting to sound market alarm bells

#58

Post by XajniN »

mdemare wrote: post #31
ENGNR wrote: post #18

Earlier quoted context omitted.

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?

No one wants less consumption, you want to pay less taxes. The only way to reduce taxes is to reduce spending.

Re: Bond rout starting to sound market alarm bells

#59

Post by t420mom »

roenxi wrote: post #12
t420mom wrote: post #9

Earlier quoted context omitted.

Not charity - they are paying tribute

Even that argument is starting to fall apart. What are the theatres where the US is supposed to be able to put on a strong showing? It doesn't seem to be Europe, they've got war on their doorstep and if anyone thinks the US is helping they should reflect on their reasoning. It doesn't seem to be the Middle East, the US has made the region less safe. They're not going to be able to act effectively against China given…

The Middle East is less safe because the US made an example of Saddam when he offered to sell oil for Euros instead of US dollars. That's a classic example of an empire ensuring the tribute continues to flow, at least until the current Emperor decides receiving tribute is a bad deal and demands every country in the world stops sending it.

Re: Bond rout starting to sound market alarm bells

#60

Post by XajniN »

jajko wrote: post #37
re-thc wrote: post #28

Earlier quoted context omitted.

> 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 +-compa…

US-related businesses are the only buyers of ASML’s most advanced machines. The 300 million American customers are worth at least 3-4 times as those 400 million in the EU.

So, while China has better cards than the US, the EU has no cards at all.

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