What Is A Treasury Bond? Are They Going Tits-Up? Did Trump Chicken Out?
Takeover of Greenland, EU tariffs now future framework of a strategy!
That President Donald J. Trump! In case you missed it, all weekend and as he was taking off for the World Economic Forum in Davos on Tuesday, he grunted and growled and pounded on his dumb web site about how he HAAAD TO HAVE GREENLAND, Denmark can’t protect it, how and why is it even theirs, he was going to tariff EU countries 10 percent and then 25 percent until they made Denmark give him Greenland, and tariff French wines 200 percent because President Macron refused to pay a billion-dollar bribe to be in Trump’s made-up peace club with Vlad Putin, Viktor Orban, and a pet psychic from Argentina. Whine, whine, whine!!
Then while Trump was in the air, and Treasury Secretary Scott Bessent was already in Switzerland, the US stock markets started going tits up, which is to say down, and then the Danish pension fund AkademikerPension confirmed that it would sell $100 million of US Treasury bonds out of concern over instability in the US.
“It is not directly related to the ongoing rift between the [US] and Europe, but of course that didn’t make it more difficult to take the decision,” said Anders Schelde, the head investor, meaning that Trump’s hostile groanings and nonstop nonsensical threats made it pretty fucking easy, not to mention how the value of the dollar has been steadily plummeting since Trump took office. Poor Scott, what if the bond selloff snowballed like an Aspen orgy!
Was Bessent’s spray-painted rubber muppet head ever in a tight spot then. He had to use his greasiest weasel words to explain to dumb reporters that once again Trump was full of shit about taking over Greenland and the threat of tariffs was just him trying to make some kind of meta-point, or something, and so everybody should just chill out, man.
What BOND SELLOFF?
“Denmark is irrelevant.” That smug little troll had to say some pointlessly dickish thing so all angry daddy would hear is how he really stuck it to that MEAN Denmark and all those UNFAIR JERKS at the lying Financial Times who LIED about the large asset managers they quoted who were considering dumping investments in the US from their portfolios.
“I just think everyone needs to take a deep breath, do not listen to the media, who are hysterical, just like they were, just like you all were on April 2, and what happened, we had the best stock market recovery in history.”
Ooh, he is so mad at those mean economists! Funds sell their bond holdings all the time, it’s no big deal. And he advised reporters on the sidelines, “It’s been 48 hours. As I said, sit back, relax.”
Relax! Trump is, of course, the only person in the room who flies into a blind, seething rage whenever he gets told “no” about anything, and constantly says things that he does not mean, because he either knows they are lies at the time or is so batshit crazy he himself can’t tell the difference any more, and we all know there are never any consequences ever. So just chill out, guys! So much for Trump doing the tariffs because they’ll be so great for the American economy that every Cletus with a GED will be able to use AI to supervise robots building robots in the robot factory.
Talk about the bond market got Bessent spooked because bond yields are the price of the debt on America’s giant credit card. US Treasury bonds and shorter-term products, T-bills and Notes, have always been considered the standard of stable kinds of investments. A bond is a bet that in 10, 20, or 30 years, the US Treasury will still exist and be able to repay with a modest but stable interest. Bonds are a perfect investment for big savings and retirement funds, and domestic funds and banks hold about 70 percent of them. Then around 30 percent of US bonds are held by foreign governments, mostly Japan, the UK, and China. Which just fell to third place; they’d already been slowly selling off their holdings.
So if the US Treasury yields go up, and bond prices go down, it means fewer investors betting on the US, and more of a risk of those bonds not paying off is priced in.
With the Supreme Court possibly on the verge of letting Trump fire Lisa Cook and Jerome Powell on the Federal Reserve Board of Governors (but probably not; the Federal Reserve is a “special case” because the Supreme Court Six likes its money) and effectively giving himself the power to set interest rates, or convert the Treasury’s holdings into Melania NFTs if he wants, you can see where long-term investors might be coming from with that worry. Sure, the Danish pension fund’s $100 million is a rounding error compared with America’s $30 trillion of debt. But investors, especially institutional ones, by definition hate uncertainty and are easily influenced by others, and a trickle and then stampede of investors selling their T-Bonds for Chinese bonds or mutual funds in Deutschemarks or Loonies could trigger a disaster. No wonder Bessent was all a-twitter to dismiss STUPID DENMARK THAT NOBODY CARES ABOUT.
And so what do you know, Trump immediately backed down from the tariffs and sending US troops to mount a coup in Nuuk and start a war with NATO, saying that he would settle for “frameworks of a future deal” of some kind. And the US stock markets recovered. For now, anyway. They’ve been riding higher on demand for AI technology, infrastructure and chips and such, but according to a study from MIT, 95 percent of businesses have seen zero return on any of their investments in AI technology yet. It seems the only jobs AI robots have actually taken so far are “student who was supposed to write their own term paper,” “lawyer who was supposed to write their own briefs,” and “Adobe Photoshop child-undresser.”
Up and up and up the markets now go! When will they crash, nobody really knows.
[Wall Street Journal gift link / CNBC / Financial Times archive link]
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He just told all his billionaire buddies to sell short. I remember when manipulating the market was illegal.
I myself am trying to avoid financial panic, but I'm also losing sleep every night now. The closer one is to retirement age, the more one can lose and not have decades to gain it back.
I'd like this TACO to go, please...