Bond vigilantes domestic and foreign

Investment Analysis Clubs Macro Economic Trends and Risks
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Many METARs focus on the stock market but the bond market is more important to the economy.

https://www.nytimes.com/2025/05/21/business/trump-tax-bonds-deficit-debt-tariffs.html

Why the ‘Big, Beautiful’ Tax Bill Is Worrying Bond Investors

Tax cuts pushed by President Trump are amplifying debt and deficit concerns among the powerful market players who influence interest rates.

By Colby Smith and Joe Rennison, The New York Times, May 21, 2025

For decades, budget hawks warned that America’s debt load was unsustainable and that runaway spending financed with borrowed money was eventually going to scare investors away from lending to the United States. Those fears are now taking hold more strongly in the bond market, and are at risk of spreading further.

Tax cuts pushed by the Trump administration are amplifying debt and deficit concerns among bond investors, a powerful group of market players who strongly influence how much it costs for the government to finance its budget…

Already there are signs that the premium demanded by investors to lend to the government has risen, a sign that they perceive a higher risk. In the language of the bond market, Treasuries could face even higher yields as their prices fall…

Much of the government’s current debt was built up by both parties when interest rates were much lower. Now, rolling over that debt with new bonds is much more expensive, accounting for more than $1 trillion of government spending this year, roughly twice what it was five years ago.

It costs the government more to pay interest than it does to fund national defense or to pay for Medicare and Medicaid. The interest bill is second only to Social Security outlays…

And if tariffs significantly curtail U.S. imports, foreigners will have fewer dollars to reinvest in the Treasury market, potentially sapping a crucial source of government financing as the current administration continues to issue new debt… [end quote]

The trend is toward higher Treasury yields.

The 10YT yield is approaching the peak that “Liberation Day” (Trump’s rollout of 145% tariffs) caused. Let’s see whether Congress responds by reducing deficits in the budget they are frantically working to pass.

Wendy

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Buffett Indicator is rather high also.

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The only realistic way to do this is to raise taxes. Pigs have a better chance at learning how to fly.

Consider this interesting detail - the $200 tax on gun silencers (suppressors), that has been in place since 1934, is on the chopping block.

The people pushing through the GOP bill are definitely NOT interested in lowering the deficit. It’s a boondoggle. A flim-flam. A dirty deed, with debt creep.

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Here’s chat’s take:

Finally, Freedom: The Silencer Tax Is Going Silent

In a bold move to protect the most vulnerable among us—those whose trigger fingers are just too sensitive for noisy gunfire—Congress has proposed ending the tyrannical $200 tax on gun silencers, a burden the American people have somehow managed to shoulder since 1934. That’s right: no longer will citizens have to pay a premium just to make their firearms whisper sweet nothings in the woods.

This isn’t about guns, safety, or even the budget. This is about liberty—specifically, the liberty to accessorize your AR-15 like it’s a Barbie doll and you’re an overenthusiastic six-year-old with a credit card. After all, in a country where hearing aids aren’t covered by Medicare, shouldn’t we at least let bullets speak at a more polite volume?

Critics may ask why silencers, devices once regulated under the same law as machine guns and sawed-off shotguns, need a tax break in 2025. But the answer is simple: priorities. Roads are overrated. Schools are loud. And climate change is probably just the sound of wind whining because it doesn’t have a suppressor.

Let’s be honest—who among us hasn’t been out hunting at dawn, disturbed not by the bloodsport, but by the sheer rudeness of a bang? The $200 tax has stood for nearly a century, stifling innovation in passive-aggressive homicide. It’s time to make murder… discreet again.

So here’s to the brave lawmakers willing to finally stand up for gun silencers—because if there’s anything this country desperately needs, it’s quieter shootings.

Pete

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I feel medium bad for side-tracking the post. Let me help get us back on target.

Irresponsible US politicians aren’t the only ones who can impact bond yields, but it would appear the market is telling them to pull their heads out TFG’s arse.

Japan is in a pickle, will they sell their US treasuries to prop of the yen and pull off a QT to QE switcheroo?

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