The spasm in the treasury market – a naturally safe haven – is a warning to the United States and Trump.
the Bond market Send a warning to Donald Trump this week.
sharp Sales– Do not go at times when the recession concerns are high, and the shares revolve around them – in pushing the president to stop the more severe mutual definitions for 90 days.
The revenues, which move in the opposite direction of prices, increased with the escalation of the trade war this month, with American treasury revenues for 10 years and 30 years It hovers about 4.5 % and 4.9 % on Friday, respectively.
It is the highest returns since February, shortly after Trump took office and caused anger in the bond market after his first place Tariffs.
Although the markets have been widely volatile since Trump returned to the White House, such nails are in US government bond returns are not normal.
It is a sign that investors may not see government debt as a The origins of a safe haven – Wall Street experts say, which may raise a problem in stabilizing financial markets and future government financing.
US Treasury bonds usually gather when the shares are sold and investors are priced at the risk of stagnation. The cabinet, which is believed to be almost free of risk, usually collects such times, which means that the returns will decrease.
“This type of things is not supposed to happen to a large market, such as the American Treasury.” “This is not normal.“
The researchers at Société Générale said: “The traditional American rotation as the diversity of risk origins is the subject of this week’s question,” said researchers at Société Générale.
There are some reasons that make markets say selling in accelerated bonds.
Foreign sale
Foreign investors have threw their shares of US treasury bonds in recent months, and perhaps because of the decrease in belief in the United States or to reach US dollars if trading with the United States begins in distress.
Foreign investors sold treasury bonds for the third month in January, where net property fell 13.3 billion dollars, according to the data analyzed by Socgen.
The bank said that foreign official investors also threw $ 24.1 billion in the treasury in that month after a major sale in December, which represents the two largest months of sale since the epidemic.
Analysts added that China’s US debt has decreased that month, and has decreased since 2013.
“Trump raises pressure on all commercial partners in the United States, they may not be good for their willingness to keep the cabinet.”
Vigilance, bond market, throw anger
The customs tariff also hurts the request of a treasury between American bond investors, who may be showing a statement about Trump’s commercial policy by selling to raise the return.
This will not be the first time that the investors have given a bite to clarify their point of view. Watch bondsInvestors who move from bonds to pressure on the government to exercise more financial restrictions or follow -up policies, they sold a similar bond when Trump took office for the first time, causing a 10 -year return of 4.8 %.
“The bonds have been beaten again,” said Yardini’s president, Yardini’s research, in a note after Trump announced the 90 -day definition stopping.
“Although awakening from the stocks was clearly telling President Donald Trump that his tariff policy was misleading late last week, his advisers described the low oil prices and bond turns in the end in America on the main street.”
The basis of relaxation trade
Hedge boxes can also be in the process of relaxing on a major bet in the locker known as the foundation trade, which takes advantage of the difference between the price of bonds and the price of futures for the treasury.
It is a source of market risk in times of fluctuations that have been marked by large financial bodies, including Federal Reserve Bank And criticize the International Monetary Fund in recent years.
“In the event of an external shock, long positions with high benefit in cash bonds through hedge boxes are at risk of being quickly binding on,” Toristin Selk, Apollo’s chief economist in Apollo, wrote in a note on Tuesday.
Selling bonds can hint more bad news for financial markets. It is mainly a sign that the view of the investors on the US cabinet as very safe assets is diminishing and that America’s reputation as a leading destination for foreign investment has been damaged.
On Friday, Neil Kackari suggested that investors may start moving away from the United States.
“Investors around the world have looked at America as the best investment place, and if this is true, we will have a commercial deficit,” said Kashkari, speaking with CNBC. “If the trade deficit is declining, investors may say, well, America is no longer the most attractive place in the world to invest, and then you expect to see bond returns to rise.”
Wall Street is concerned about what the sale of market fluctuations in the future can mean.
Wild movements in the bond market raises concerns about fluctuations in other risk assets.AP/Richard Drew
“We do not believe that risk assets can settle until the bond market worksBarclays Rajadiaksha. “Perhaps this week’s events were once. Perhaps a deal is announced during the weekend that raises feelings, expands the differences of swap, and leads to strengthening US prices for a longer period and US dollar. But unless these things have been constantly occurring for at least a few days – until the treasury bonds return to behave in the way it is supposed – we will be very careful in all the origins of risk.”
“The bond investors should remain vigilant,” said Matt Ighan, a portfolio manager in Le Mists, Siles and Companish. “The latest prices of prices indicate that the American Treasury market itself can become a source of instability – a danger now feels more reasonable than far.”
Finally, if investors are not ready to buy the most governmental debt, this may lead to a funding problem for the United States.
The government relies on investors who buy debt bonds to finance its activity – there are about 3 trillion dollars in the US Treasury debts that are scheduled to mature this year and that will need to be re -funded.
The demand for US Treasury auctions for 10 years and 30 years was strong this week.Chip Somodevilla/ Getty Images
This has not happened yet. The demand for US treasury bonds for 10 years and 30 years was strong in auctions this week, as the government issued $ 22 billion in 30 -year bonds and $ 39 billion in 10 years bonds.
However, for a brief moment, the market was deviating to dangerous lands, as the senior economists Muhammad Al -Arian said.
“We are close to the line that separates the movement of the ground market in the bond market to the market weakness,” said Eliaz’s chief economic advisor on Wednesday. “We don’t want to get there again. Because the more you reach this point over and over, the higher the high risks you will count.”
