Might be the case for domestic investors who don’t really have many other options, but internationally the situation for US bonds is looking bleak. Even Japan is now starting a sell off.
They’ve grumbled about it, but their total tbill holdings are up. The general assumption right now seems to be that Trump is going to capitulate and so, at least right now, it’s all just people making noise to make it happen. The numbers show that foreign entities are still comfortable holding US debt.
Consensus is still that that’s the hedge funds unwinding their bond holdings to cover stock losses. The bond sell off might also be interpreted as a reaction to the fact that inflation is still high and the difference between bond yields and inflation has been low lately. Also, if you look at more recent data it looks like rates have started cooling off again: https://tradingeconomics.com/united-states/government-bond-yield
This graph also illustrates that Japanese bonds also appear to be selling off, so if the government is pulling out of US bonds, it’s not going toward domestic bonds, which is interesting.
Like I said it’s volatile and highly dependent on what crazy thing Trump says day to day. However, the volatility itself is precisely what drives the demand for US bonds down in the long term. Ultimately, buying of bonds is based on confidence that US economy is going to be stable, and right now that very much doesn’t look to be the case.
I don’t think it’s that surprising that Japanese aren’t doing well either since Japan’s economy is highly dependent on US as well.
Yeah, I don’t disagree on the fundamentals, my point is just that for now the crisis doesn’t appear to be extended to the government itself. I think this is a sign that, headlines notwithstanding, the dominant thinking is still that the status quo is going to hold in the near term, even if it is accelerating the loss of the US’s influence on the global financial system in the long term.
That’s fair, the idea that US economy might be imploding is still very difficult for people to swallow, and it’s probably gonna take some serious shocks before real dumping begins.
Might be the case for domestic investors who don’t really have many other options, but internationally the situation for US bonds is looking bleak. Even Japan is now starting a sell off.
They’ve grumbled about it, but their total tbill holdings are up. The general assumption right now seems to be that Trump is going to capitulate and so, at least right now, it’s all just people making noise to make it happen. The numbers show that foreign entities are still comfortable holding US debt.
It’s a volatile situation, here’s a newer article https://www.bloomberg.com/news/articles/2025-05-01/foreign-funds-sour-on-us-corporate-bonds-as-trump-sows-chaos
That one’s about private corporate debt, not US government debt.
government bond sell off is happening as well as seen with yields here
https://www.ft.com/content/0005e091-930d-46ff-9e81-8591704a9282
Consensus is still that that’s the hedge funds unwinding their bond holdings to cover stock losses. The bond sell off might also be interpreted as a reaction to the fact that inflation is still high and the difference between bond yields and inflation has been low lately. Also, if you look at more recent data it looks like rates have started cooling off again: https://tradingeconomics.com/united-states/government-bond-yield
This graph also illustrates that Japanese bonds also appear to be selling off, so if the government is pulling out of US bonds, it’s not going toward domestic bonds, which is interesting.
Like I said it’s volatile and highly dependent on what crazy thing Trump says day to day. However, the volatility itself is precisely what drives the demand for US bonds down in the long term. Ultimately, buying of bonds is based on confidence that US economy is going to be stable, and right now that very much doesn’t look to be the case.
I don’t think it’s that surprising that Japanese aren’t doing well either since Japan’s economy is highly dependent on US as well.
Yeah, I don’t disagree on the fundamentals, my point is just that for now the crisis doesn’t appear to be extended to the government itself. I think this is a sign that, headlines notwithstanding, the dominant thinking is still that the status quo is going to hold in the near term, even if it is accelerating the loss of the US’s influence on the global financial system in the long term.
That’s fair, the idea that US economy might be imploding is still very difficult for people to swallow, and it’s probably gonna take some serious shocks before real dumping begins.