Your understanding is erroneous. It's true they hold the most of US bond among different entities but they don't hold the majority of the bonds. It's like you holding 10% stock in a company and you own the largest number of stocks but it does not mean you have control over the company just with that 10%.
Not I say one. I'm also reading from analysis online... It made sense. Donald Trump is rash. But he ain't stupid. It cannot be true that he believed by resorting to tariffs, he can bring manufacturing back to America overnight. So, that cannot be true.
There are 600B UST maturing in Jun and he needs someone to take over. Not only that, he needs someone to take over at a much lower yield to prevent the America government defaulting on the loan.
https://www.independent.co.uk/business/trump-tariffs-pause-stock-market-b2731418.html
Bonds
Finally, but absolutely most importantly, this is almost certainly what
really forced the turnaround.
Usually, when stock markets drop, bond prices rise. It’s the safe haven, the assurance that when companies’ share prices won’t pay, then countries will:
bonds are government debt, which pay interest and return the initial capital on maturity.
Except, this time, US Treasuries (what they call bonds) took a steep drop.
open image in gallery
Bond prices are almost certainly what really forced Donald Trump’s hand (AFP via Getty Images)
You can buy Treasuries over different time frames. The yield - the amount of payout - has an inverse relation to the price, so when the price goes down, the yield goes up. Yield for ten-year US Treasury bonds (
the safe haven, traditionally) rose from 4.0 per cent to more than 4.5 per cent in the space of around three days, which is a very large increase in relative terms across a short space of time.
Those numbers sound small in isolation, but they are enormous indicators of the predicted economic stability of the US and the amounts they have to pay on their debt - which is in the trillions of dollars.
Hedge funds are mostly suspected to be behind the bond market turmoil, selling off government debt and, in turn,
raising 30-year borrowing costs to a five-year high.
“Notably yields on long-term US government debt - a surge in which may have helped concentrate minds in the White House - remain elevated even if they have come back from their highs,” said AJ Bell investment director Russ Mould.
“This shows there is still lingering concern about US trade policy, and while the 90-day pause is welcome news for stocks, the lack of long-term clarity may become more of an issue as time goes on.”
Jon Stewart ridicules Trump’s new nickname following trade tariff chaos
https://www.businesstimes.com.sg/international/global/trump-says-long-promised-pharmaceutical-tariffs-due-very-shortly ?utm_source=taboola&utm_medium=cpc&utm_campaign=bt_contentamplification&utm_content=202504_bt_contentamplification&utm_term=20250409
Trump says long-promised pharmaceutical tariffs due very shortlyThe Business Times|
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Raising inflation is one thing but placing that burden on the American public is quite another, and a battle Trump - as with others before him - simply could not win. So a pause is in place, the ten-year bills yield is retracing to around 4.3 per cent... and the wider uncertainty of what comes next is back.
But at least it’s not an immediate total collapse of all markets anymore.
