Financial Times (January 19)
“Trump’s bizarre designs on Greenland and his willingness to inflict financial pain on allies” mean that “the U.S. has squandered its most valuable financial asset: trust. It risks paying a heavy price for this for decades to come.” The U.S. remains the only market “big enough to absorb” giant capital flows so this “is not about ‘sell America.’” Europe is not going to sell its $8 trillion worth of Treasuries overnight. Rather, Trump’s latest move provides “a big incentive for investors to buy more bonds and stocks from elsewhere over time…. to spread things a little more globally.”
Tags: $8 trillion, Allies, Asset, Bizarre, Bonds, Capital flows, Europe, Financial pain, Greenland, Heavy price, Incentive, Investors, Risks, Sell America, Squandered, Stocks, Treasuries, Trump, Trust, U.S., Valuable
South China Morning Post (December 19)
“China reduced its US Treasury holdings in October to its lowest level in 17 years, as mounting concerns over US debt sustainability and the Federal Reserve’s independence further eroded confidence in dollar-backed assets. The country’s stockpile fell to US$688.7 billion in October, down from US$700.5 billion in September.” At the peak in 2013, China held approximately US$1.32 trillion in Treasuries.
Tags: 2013, Assets, China, Concerns, Confidence, Debt sustainability, Federal Reserve, Independence, Lowest, Peak, S, Treasuries, U
New York Times (November 6)
“President Trump’s barrage on global trade appears to have taken a hit” during questioning in front of the Supreme Court. “Concerns are growing that the Supreme Court could scramble the Trump administration’s tariffs strategy. That may be welcome news for free-trade advocates, but it could also unleash more uncertainty for businesses and Wall Street.” Market reaction was rapid as “the yield on 10-year Treasury notes spiked to 4.15 percent,” a sell-off that suggests “bond holders are fretting that an adverse ruling could deprive the government of revenues needed to offset the federal deficit.”
Tags: Barrage, Bond holders, Businesses, Free trade, Fretting, Global trade, Market reaction, Revenues, Scramble, Sell-off, Supreme Court, Tariffs strategy, Treasuries, Trump, Uncertainty, Wall Street, Yield
New York Times (April 21)
“President Trump’s trade war has completely upended investment flows, with global investors selling off U.S. stocks and corporate and government bonds at a clip unlike anything Wall Street has seen in recent years.” Though some semblance of “calm returned to the corporate and government bond markets late last week,” analysts are still wary of “Trump’s next moves, fearing that his protectionist policies and threats against federal institutions could re-accelerate money flows out of the United States, hitting the dollar especially hard.”
Tags: Analysts, Bonds, Calm, Corporate, Global investors, Institutions, Investment flows, Markets, Money flows, Protectionist, Stocks, Threats, Trade war, Treasuries, Trump, U.S., Upended, Wall Street
The Economist (April 19)
The dollar is meant to be a source of safety. Lately, however, it has been a cause of fear. Since its peak in mid-January the greenback has fallen by over 9% against a basket of major currencies.” Meanwhile, the yield on Treasuries has been rising. “That mix of rising yields and a falling currency is a warning sign: if investors are fleeing even though returns are up, it must be because they think America has become more risky,” which explains the rumors that “big foreign asset managers are dumping greenbacks.”
Tags: Asset managers, Basket, Dollar, Dumping, Falling, Fear, Fleeing, Greenbacks, Investors, Major currencies, Peak, Returns, Risky, Safety, Treasuries, Warning sign, Yields
The Economist (April 10)
“For a good few hours on April 9th, disaster beckoned. Share prices had been falling for weeks. Then the market for American Treasury bonds—normally among the safest assets available—started convulsing, too. The yield on ten-year Treasuries leapt to 4.5%…. That meant bond prices, which move inversely to yields, had cratered. The failure of both risky and supposedly safe assets at once threatened to destabilise the financial system itself.”
Tags: April 9, Bonds, Convulsing, Cratered, Destabilise, Disaster, Failure, Financial system, Market, Risky, Safe assets, Share prices, Threatened, Treasuries, U.S., Yield
Wall Street Journal (February 17)
“Treasury yields have sprung to multiyear highs, forcing the U.S. government to pay a lot more in interest and putting pressure on the budget.” Over the new decade, federal interest costs are now expected to rise by $1.1 trillion, reviving “Wall Street worries that the years-long acceleration in borrowing under both political parties will eventually weigh on economic growth and asset prices.”
Tags: $1.1 trillion, Asset prices, Borrowing, Budget, Costs, Economic growth, Interest, Pressure, Treasuries, U.S. Government, Wall Street, Worries, Yields
Investment Week (April 21)
“Following the collapse of Silicon Valley Bank and other US regional banks, as well as the turmoil around Credit Suisse, the banking sector has sat on wobbly ground in investors’ minds.” Depositors have “moved into treasuries and money market funds to avoid the risk that their bank could be next to fall.” As a result, the S&P Banks Select Industry index dropped 22.5% during March.
Tags: Banking sector, Collapse, Credit Suisse, Depositors, Investors, Money market funds, Regional banks, Risk, SVB, Treasuries, Turmoil, U.S., Wobbly
Wall Street Journal (October 3)
“Investors propelled bond yields to multiyear highs Wednesday as robust economic data and an easing of trade tensions across North America sparked fresh optimism about the global growth outlook. Wednesday’s bond rout sent the yield on the 10-year U.S. Treasury note, a closely watched barometer of investors’ sentiment toward growth and inflation, to its highest level since July 2011.”
Tags: Bonds, Economic data, Growth, Highs, Inflation, Investors, Optimism, Sentiment, Trade tensions, Treasuries, U.S., Yields
Institutional Investor (June 27)
“Further escalation between the U.S. and China could make U.S. Treasuries less dependable.” But that’s only the tip of the iceberg. “Every trade is financed…. Trade and capital flows are part and parcel of a complex system. Mess with trade flows and there will be ‘unintended’ impacts on capital flows. Equally, disturb capital flow and there will be an impact on trade flows.” As trade issues also flare up with NAFTA and Brexit, it’s “no wonder equity markets are volatile.”
Tags: Brexit, Capital flows, China, Equity markets, Escalation, Impacts, Nafta, Trade, Treasuries, U.S., Unintended, Volatile
