Trump's Prioritized US Returns are Reversing! What Does It Mean? - Coin Bulletin

The 10-year bond yield of Amerika shows the deep cracks in the global financial system, and this situation poses a significant threat in terms of President Trump's borrowing strategies.

On April 8, when the markets experienced the most volatile trading day since March 2020, trade tensions between America and China and currency movements led to concerns in global markets. During this tumultuous period, the yields on 10-year U.S. Treasury bonds rose to 4.22%. However, the main reason for this increase was not solely due to foreign sellers.

Ole S. Hansen, the head of commodity strategy at Saxo Bank, stated that the sudden movement in long-term U.S. Treasury bonds indicates deepening stress in the market. Experts suggested that China's selling of U.S. Treasury bonds and repurchasing of assets could also influence this situation. However, Jim Bianco, president of Bianco Research, expressed that foreigners are not selling bonds; rather, domestic investors are selling due to inflation concerns.

Increasing tensions in global markets and rising interest rates

The rise in interest rates on US bonds is complicating the debt restructuring plans targeted by the Trump administration. Moreover, this increase has not been limited to the US, as similar interest rate hikes have been observed in other countries like England. Global markets reacted to the fluctuations, especially in currencies and government bonds. Hansen noted that these increases are driven not only by trade tensions but also by the actions of major bondholders.

Foreign investors or local sellers?

Analysts' disagreements raise questions about the accuracy of reports that foreign investors are selling U.S. bonds. Bianco argues that these sales were not made by China or other foreign investors, but rather emphasizes that domestic investors are selling to hedge against inflation. When considered in parallel with the increase in foreign exchange, this situation indicates that there is more foreign investment directed towards the U.S.

Markets are starting to see more clearly the fragilities in America's financial system as tensions rise.