Here is a chart that should cause you some alarm. Since 2020 the trend in Bond yields has been up (price down). What is it going to take for buyers to be willing to own US govt debt? Or what fancy "where is the rabbit" trickery will the Fed do? $US30
...didn't I tell you that it wouldn't be long that international investors would demand a higher risk premium to hold US Treasuries. In other words, the yields have to be higher for them to want to buy them.
...I didn't realise it would happen so soon. And it did because Trump's 'all over the place and on the fly' discombobulated tariff policy and U-turns are unnerving investors big time.
...Trump 2.0 strategy for what its worth is simply exacerbating their debt problems, rather than fixing it.
...But wait ! There are yet other diabolical 'master strokes' waiting to happen. Trump's coercive tariff policy would be once again used to 'force' its major allies to accept a swap of existing or soon to mature USTs for a zero coupon 100 year US bond that would trap US creditors into a lifelong debt that is probably never to be repaid by the US. Swap or the higher tariff stays. Plus, they would also likely coerce allies into siding with US and dumping/starving China in access to strategic minerals/chips or else more tariffs.
...the more he looks like losing, the more dangerous he becomes.
...and the more he continues with this, the more his creditors would be seeking the fastest way out of US assets. What happens then is the Fed becomes the lender of last resort, similar to what happened in Japan where BoJ is the main holder of Japanese bonds....and USA could end up suffering a similar Japanification of its markets.
...USA under Trump 2.0 is digging a big HOLE for themselves.
