•U.S. 20Y Yield: Spiked to 5.097%, up +10.7 bps intraday. •10Y Yield: Rose +11.1 bps to 4.592% •30Y Yield: Jumped +10 bps to 5.067%
This caused stocks to trend down and even the dollar. Simply put the US is adding a lot of debt, reducing revenue by cutting taxes and there’s wild amounts of uncertainties due to Trump’s tariff and trade policies. Bond traders are worried, Japan is reducing its Treasuries holdings, and everyone is looking imploringly at the Federal Reserve.
As a friend quipped “the economy is perfectly healthy, as long as we keep it on life support.”
Which is to say the likely result is that the Federal Reserve will have to step up and start buying Treasuries again. The last time it did that was during Covid.
“Print more money to bail out elites.”
But here’s the problem. The US really is trouble. Yes, in principle the US can print as much money as it wants, like any sovereign that issues its own currency. But that’s not the issue. The question is “what does the money being printed produce?”
QE has essentially produced richer elites, more monopolization, a poorer general population (a recent study found 60% of Americans cannot afford a “decent” lifestyle), and higher prices. You could also say it has funded a less competitive America that is falling further and further behind in technology.
It’s what you spend money on that matters. All QE has EVER done is make it so that current elites stay in power, keep getting richer and are rewarded for driving American into the ground at every accelerating speeds.
The Fed can’t rescue America from spending its money to do all the wrong things. That requires legislative and executive action. Those parts of the government, however, are even more fickle and stupid than the Fed, which is like saying that Mount Everest is taller than K2. Technically true, but both are so tall (stupid) that it beggars belief.
If there’s something the US can do wrong right now, it’s doing it wrong, and it if it isn’t, it’s a legacy policy they haven’t gotten around to fucking up yet.