Surprised there isn't mention that a big part of the tariff strategy is to throw the equity markets into chaos in an effort to drive down the price of the 10-year bond. There was a panic last night because the 10 year bond price started going up as stocks were trading down, which is not supposed to happen. It would be truly disruptive if the whole game gets blown up by a lack of buyers for US debt.
> the 10 year bond price started going up as stocks were trading down,
Correct me if I'm wrong, but the abnormal thing happening was that treasury yields were going up, which meant that prices were going down (due to lack of buyers, as you said), right?
+1
https://www.theguardian.com/business/2025/apr/09/dramatic-se...
> The yield – or interest rate – on the benchmark 10-year US Treasury bond rose to 4.516% on Wednesday before slipping back to 4.451%, up 0.14 percentage points on the day.
Yes, that's what I meant.
Q is anyone knows: would yield on the 10y going down actually help the US to refinance its existing debt (akin to a mortgage refinance), or simply issue new debt more cheaply?
I think it's both, more debt is added all the time and the existing debt gets refinanced as it rolls over.
Just found an article about this whole strategy (and how it's not working) here[1].
[1] https://www.reuters.com/markets/rates-bonds/us-10-year-yield...
if all these shenanigans kill the whole driving point of bonds anyway (the full faith and credit of US Govt) - will it ever be as easy for the treasury to issue bonds again?
If foreign investors like China dump our debt, prices will go down and yields will go up. As long as we increase our debt ceiling and don’t do anything intentionally crazy like try to renegotiate existing debt (which would be a technical default), we could always issue more treasuries at the higher rates with the caveat that more money will need to be spent servicing the debt, which requires even more debt be issued. A vicious cycle for sure.
New debt would be cheaper. Most US treasuries are fixed rate debt. There may be some FRNs (floating rate notes) floating around (pardon the pun) but not many. Tbills are discount instruments but also wouldn’t be affected until they mature and new ones are issued.
> a big part of the tariff strategy
You mean, a big part of one of the inconsistent explanations people are desperately theorizing, because they're too afraid of the simple answer... that there isn't any strategy at all?
[Edit: Or, to be more precise, no strategy which is both (A) sane and (B) designed for America rather than for specific individuals.]
> chaos in an effort to drive down the price of the 10-year bond
I assume this means "the US government will benefit by being able to borrow money more cheaply than before because so many people can't trust stocks". That explanation rests on a big fat false assumption that trust in the particular debtor issuing the bonds remains unchanged as more people want to lend them money.
Instead, economic trust in the US--built up over decades--is being actively firebombed into the dirt by the new Republican regime. This means the US government can easily end up in a far worse position than before, because creditors will demand higher interest-payments to offset the "holy shit your country might implode first" risk they're taking on.
Or, y'know, they'll take their money out of US stocks and then buy the bonds of some other government entirely...
> Instead, economic trust in the US--built up over decades--is being actively firebombed into the dirt by the new Republican regime.
I think that's an important thing to reiterate.
This isn't Trump. This isn't MAGA. This is the entire Republican Party apparatus that is allowing this to continue. The Republicans of the Nixon, Regan, Bush eras are long gone.
> This is the entire Republican Party
1000%.
The malfeasance from the executive branch could be curtailed almost immediately if there were responsible GOP reps in Congress. They're not powerless passengers on this train, they're actively shoveling coal into the steam engine.
For a concrete example, the law Trump is abusing--where some smuggled fentanyl constitutes National Emergency that lets him invent a tax on Americans--states that any motion in the House to terminate the "emergency" must be given a vote within 15 days or less.
But last month, the Republican majority in the House voted (party-line) to declare that calendar-days for the rest of the year just... don't actually count as time passing, for no particular reason.
That's active complicity.
https://www.reuters.com/world/us/house-republicans-block-con...
https://www.congress.gov/bill/119th-congress/house-resolutio...
I think that drawing a distinction between Trump, MAGA, and the Republican Party may be a mistake. It's all one and the same. Which makes me wonder about all the "moderate" Republican voters, and what's going to happen when Trump kicks it.
This doesnt make sense. When money moves out of stocks, it has to go somewhere. Typically, it moves to less-risky assets, like bonds. That makes their prices go up, and yields down.
Likewise, why would the tariff strategy be to drive down bond prices? Lower prices means receiving less for their issuance/paying more interest...
Youve got it all backwards friend
Pretty sure you're confusing the price of bonds with their yields, which are inversely correlated. Yields have gone up (to put it mildly).
Trump explained his tariff idea to Oprah in previous century. But sure, it's a dynamic plan in response to a 2025 bond sale.