MarketWatch (February 17)
“A trillion-euro market” is arising as Europe wakes up to the end of “the post-Cold War international order with its security bargain.” The result could be “a bond market powerhouse that threatens U.S. Treasurys.” Europe now looks to be moving toward “a Eurobond market exceeding €1 trillion. This includes approximately €650 billion from the coronavirus era, €95 billion for Ukraine and several hundred billion euros from new defense facilities and national borrowing enabled by fiscal exemptions.”
Tags: €1 trillion, Cold war, Coronavirus, Defense facilities, Eurobond market, Europe, Exemptions, International order, Powerhouse, Security, Treasurys, U.S., Ukraine
MarketWatch (November 21)
“Developments in Japan are now creating the risk that U.S. yields could rise alongside Japan’s yields.” Amid budget concerns over proposed fiscal stimulus, yields on JGBs “hit their highest levels in almost two decades, with the country’s 10-year rate spiking above 1.78% to its highest level in more than 17 years” while 40-year yields “climbed to an all-time high just above 3.7%.” Since Japan “is the biggest foreign holder of Treasurys, with a roughly 13% share… the concern is that the country’s investors might one day pull the rug by keeping more of their savings at home.”
Tags: 1.78%, 3.7%, Budget, Developments, Fiscal stimulus, Investors, Japan, JGBs, Risk, Savings, Treasurys, U.S., Yields
Wall Street Journal (April 21)
“If the White House wanted a test of how firing Jerome Powell would go over in the markets, it succeeded on Monday. U.S. stocks and the dollar plunged while yields on long-term Treasurys climbed after President Trump renewed his attacks on the Federal Reserve Chairman.” The President “thinks he can bully everyone into submission, but he can’t bully Adam Smith, who deals in reality. Markets know tariffs are taxes, and taxes are anti-growth.” It is clear that the “Trump tariffs are the biggest economic policy mistake in decades.” What remains unclear is the President’s ability to see reality. “Markets are spooked because they don’t know if Mr. Trump listens to anyone but his own impulses.”
Tags: Adam Smith, Anti-growth, Attacks, Bully, Dollar, Fed, Firing, Markets, Mistake, Plunged, Powell, Reality, Spooked, Stocks, Submission, Tariffs, Taxes, Treasurys, Trump, U.S., White House, Yields
Wall Street Journal (April 14)
“The biggest issue in financial markets these days, other than tariffs, is the fate of U.S. dollar assets. Are President Trump’s herky-jerky decision-making and border taxes causing the world’s investors to shy away from the dollar and U.S. Treasurys?” Amid the volatility, that remains to be seen, but any shift would occur “’at the margin’ because the U.S. remains too big a market, and its financial system too liquid, to ignore.” Still, the potential impact should not be dismissed lightly. “Even a modest shift from Treasury bonds” could have enormous repercussions.
Tags: Bonds, Decision-making, Dollar assets, https://www.wsj.com/opinion/is-there-a-new-trump-risk-premium-tariffs-trade-policy-bonds-us-dollar-investing-9bee401d?mod=hp_opin_pos_4#cxrecs_s Financial markets, Impact, Investors, Jerky, Liquid, Margin, Shift, Tariffs, Taxes, Treasurys, Trump, U.S., Volatility
Wall Street Journal (March 25)
“Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023.” This makes people “nervous” because “rapid growth in markets from tech stocks to mortgage bonds has ended badly in the past.” Given their ubiquity and potentially “unforeseen consequences,” any instability in the Treasury market “could rapidly spread” to other markets.
Tags: $23 trillion, 2023, Doubling, Exploded, Government, Issuance, Mortgage bonds, Nervous, Pandemic, Tech stocks, Treasurys, U.S., Ubiquity, Unforeseen consequences
