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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

#81

Post by pjc50 »

roenxi wrote: post #46
pjc50 wrote: post #25

Earlier quoted context omitted.

> 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 I think you have this backwards: the US was helping considerably, and then got taken over by pro-Russian conspiracy theorists. But the bond stuff isn't "tribute" or nationalism; remember, it…

> But the bond stuff isn't "tribute" or nationalism; remember, it's being made by private sector investors, not national governments. Are you sure about that? Back in 2022 the US Treaury reckoned that most holdings were foreign governments [0] - they had Foreign Official at ~3.9 trillion and foreign total at ~7.5 trillion. That has been shifting towards the private sector since then but the market has heavy sovereign…

> there isn't a reasonable path to them paying the money back

Indefinite rollover is completely fine! Yes there are problems if the total interest payment gets too large, and there's scope for discussion about that, but there's no hard cutoff, it just becomes more and more uncomfortable.

People saying there will be a default: deadline please. Or is this just a general assumption that mortality is inevitable for states? The UK has never defaulted, for example.

Re: Bond rout starting to sound market alarm bells

#82

Post by EdiX »

griffzhowl wrote: post #71
niklasbuschmann wrote: post #8

Many people here were so confident a few days ago that the tariffs were just some 4d chess to get interest rates down, despite this not making any sense.

> despite this not making any sense. Most commentary, for and against, has been exclusively on the economics, and from that perspective it makes little to no sense. But I've seen suggestions in a couple of places that there are relevant "national security" motivations, or to put it bluntly, a greater freedom to wage war - or at least to put oneself in a position where the threat of it would be more realistic. Decoupl…

> It's a commonplace of international relations, and intuitively obvious, that the more integrated are the economies of two countries, the less likely they are to start wars with each other

This is indeed a common way of thinking and intuitively obvious but I think it has also been proven wrong by the war in Ukraine. We sanctioned Russia as hard as we could and it 3 years later they're still there.

Withholding some nebulous service industry from a country that's mostly reliant on primary and/or manufacturing is probably not a strong enough deterrent to a sufficiently motivated political force. It might be that it just puts service industry reliant countries at a disadvantage.

Drone warfare is another piece of the puzzle, both how they are employed in the Ukrainian war as well as in the red sea blockade. The west is also at a disadvantage here compared to, say, China. When was the last time you saw a drone-dragon lightshow outside of Shenzhen?

We thought we had world peace through commerce but it was probably an illusion. I think everyone is rethinking the last 150 years of history right now.

Re: Bond rout starting to sound market alarm bells

#83

Post by intended »

ethbr1 wrote: post #79
codingbot3000 wrote: post #34

Earlier quoted context omitted.

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.

Globalists failed to take into account the anger that employment dislocation would generate. 'The labor market will reallocate to productive jobs' doesn't take into account the experience of having ones income security disappear as an industry is shipped overseas, then having to retrain into a new field. And the US largely didn't fund that, at least in a meaningful, at scale, don't-piss-people-off way. Those at the t…

People are rightfully angry. LORD has it taken a long time for people to start talking about how everyone can’t become a coder. However, this seems like common knowledge today, but it was unpopular to think about this back when people were still struggling to deal with the issues that were cropping up.

Trump the character plays the storyline, which is hopefully useful to help people predict what’s happening.

What bugs me is that, the deeper shifts aren’t part of the counter narrative. Automation is eating jobs faster than trade ever did. Lights-out factories exist.

Also - it sucks to get taxed, sure. However it sucks more to not have a working global market. Your wealth is better if you have more people able to buy and make things.

Re: Bond rout starting to sound market alarm bells

#84

Post by tarsinge »

griffzhowl wrote: post #71
niklasbuschmann wrote: post #8

Many people here were so confident a few days ago that the tariffs were just some 4d chess to get interest rates down, despite this not making any sense.

> despite this not making any sense. Most commentary, for and against, has been exclusively on the economics, and from that perspective it makes little to no sense. But I've seen suggestions in a couple of places that there are relevant "national security" motivations, or to put it bluntly, a greater freedom to wage war - or at least to put oneself in a position where the threat of it would be more realistic. Decoupl…

> the strategic cost-benefit analysis

Is there anything pointing to this supposed thorough analysis really being done behind the doors? Genuinely asking, because for now in my opinion from POTUS communications I don’t make me think there is and this comment is another instance of trying to make something irrational rational.

Re: Bond rout starting to sound market alarm bells

#85

Post by ryandvm »

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.

As always, Republicans are their own best argument for limited federal government.

Re: Bond rout starting to sound market alarm bells

#86

Post by ac29 »

tim333 wrote: post #75

>"You look at what happened to the curve last night, that was pretty extreme by anyone's metrics - 2s-10s steepening 30 basis points in a few hours, I've certainly never seen that," The 2s-10s spread tends to act a bit like brakes for the economy. The 10 year yield is largely down to inflation and the 2 year largely controlled by the federal reserve. They raise the 2 year above the 10 year to slow the economy if you…

> They raise the 2 year above the 10 year to slow the economy

Who is the the "they" here? The government does not set 2 year or 10 year rates, they are priced by auction for new issues and priced by the market for secondary transactions.

Re: Bond rout starting to sound market alarm bells

#87

Post by ac29 »

leereeves wrote: post #80
tim333 wrote: post #75

>"You look at what happened to the curve last night, that was pretty extreme by anyone's metrics - 2s-10s steepening 30 basis points in a few hours, I've certainly never seen that," The 2s-10s spread tends to act a bit like brakes for the economy. The 10 year yield is largely down to inflation and the 2 year largely controlled by the federal reserve. They raise the 2 year above the 10 year to slow the economy if you…

That's an interesting point. The 2-year yield did drop noticeably on April 3rd, the day after the tariffs were announced. Do you think the Fed did that to offset the impact of tariffs?

The Fed doesnt set the rate of the 2 year or any other treasury. They effectively put a floor on the price of the shortest dated treasuries by setting the overnight rate, but the longer dated the treasury, the less effect the federal funds rate has on it.

Re: Bond rout starting to sound market alarm bells

#89

Post by griffzhowl »

leereeves wrote: post #76
griffzhowl wrote: post #71

Earlier quoted context omitted.

> despite this not making any sense. Most commentary, for and against, has been exclusively on the economics, and from that perspective it makes little to no sense. But I've seen suggestions in a couple of places that there are relevant "national security" motivations, or to put it bluntly, a greater freedom to wage war - or at least to put oneself in a position where the threat of it would be more realistic. Decoupl…

I think the strategic angle is important, but I doubt it's part of a long-term plan to start a war with China. I think the more likely concern is that if the US becomes too dependent on Chinese manufacturing, China could impose sanctions on the US to control US foreign policy. And a similar concern applies if the US lacks the manufacturing capability to wage wars with its own resources. Something we already saw that…

Thanks, that's probably a more sober and probable assessment. It could make sense for reducing potential Chinese leverage over US. I think if the point were to shore up defense-critical industries, though, then direct support for those industries would make more sense and be considerably less disruptive than these tariffs.

Re: Bond rout starting to sound market alarm bells

#90

Post by ac29 »

optimalsolver wrote: post #38
sanp wrote: post #32

Earlier quoted context omitted.

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.

Large casinos are very expensive to build and operate. Even if they have favorable gross margins (the house edge), its pretty easy to lose money net of expenses.
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