{"id":107,"date":"2025-04-11T20:50:13","date_gmt":"2025-04-11T20:50:13","guid":{"rendered":"http:\/\/www.soapandseife.com\/?p=107"},"modified":"2025-04-12T23:26:05","modified_gmt":"2025-04-12T23:26:05","slug":"freak-sell-off-of-safe-haven-us-bonds-raises-fear-that-confidence-in-america-is-fading","status":"publish","type":"post","link":"http:\/\/www.soapandseife.com\/index.php\/2025\/04\/11\/freak-sell-off-of-safe-haven-us-bonds-raises-fear-that-confidence-in-america-is-fading\/","title":{"rendered":"Freak sell-off of \u2018safe haven\u2019 US bonds raises fear that confidence in America is fading"},"content":{"rendered":"

By BERNARD CONDON and STAN CHOE, AP Business Writers<\/strong><\/p>\n

NEW YORK (AP) \u2014 The upheaval in stocks has been grabbing all the headlines, but there is a bigger problem looming in another corner of the financial markets that rarely gets headlines: Investors are dumping U.S. government bonds.<\/p>\n

Normally, investors rush into Treasurys at a whiff of economic chaos but now they are selling them as not even the lure of higher interest payments on the bonds is getting them to buy. The freak development has experts worried that big banks, funds and traders are losing faith in America as a stable, predictable, good place to store their money.<\/p>\n

\u201cThe fear is the U.S. is losing its standing as the safe haven,\u201d said George Cipolloni, a fund manager at Penn Mutual Asset Management. \u201cOur bond market is the biggest and most stable in the world, but when you add instability, bad things can happen.\u201d<\/p>\n

That could be bad news for taxpayers paying interest on the ballooning U.S. debt, consumers taking out mortgages or car loans \u2014 and for President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets.<\/p>\n

What’s happening?<\/h4>\n

A week ago, the yield on the 10-year Treasury was 4.01%. On Friday, the yield shot as high as 4.58% before sliding back to around 4.50%. That\u2019s a major swing for the bond market, which measures moves by the hundredths of a percentage point.<\/p>\n

Among the possible knock-on effects is a big hit to ordinary Americans in the form of higher interest rates on mortgages and car financing and other loans.<\/p>\n

\u201cAs yields move higher, you\u2019ll see your borrowing rates move higher, too,\u201d said Brian Rehling, head of fixed income strategy at Wells Fargo Investment Institute. “And every corporation uses these funding markets. If they get more expensive, they\u2019re going to have to pass along those costs customers or cut costs by cutting jobs.\u201d<\/p>\n

Treasury bonds are essentially IOUs from the U.S. government, and they\u2019re how Washington pays its bills despite collecting less in revenue than it spends.<\/p>\n

To be sure, no one can say exactly what mix of factors is behind the developing bond bust or how long it will last, but it\u2019s rattling Wall Street nonetheless.<\/p>\n

Bonds are supposed to move in the opposite direction as stocks, rising when stocks are falling. In this way, they act like shock absorbers to 401(k)s and other portfolios in stock market meltdowns, compensating somewhat for the losses.<\/p>\n

\u201cThis is Econ 101,\u201d said Jack McIntyre, portfolio manager for Brandywine Global, adding about the bond sell-off now, \u201cIt\u2019s left people scratching their heads.\u201d<\/p>\n

The latest trigger for bond yields to go up was Friday’s worse-than-expected reading on sentiment among U.S. consumers, including expectations for much higher inflation ahead. But the unusual bond yield spike this week also reflects deeper worries as Trump\u2019s tariffs threats and erratic policy moves have made America seem hostile and unstable \u2014 fears that are not likely to go away even after the tariff turmoil ends.<\/p>\n

\u201cWhen the issue is a broader loss of confidence in the United States, even a much fuller retreat on trade might not work\u201d to bring yields down, wrote Sarah Bianchi and other analysts at investment bank Evercore ISI. \u201cWe\u2019re not sure any of the tools remaining in Trump\u2019s toolkit will be sufficient to fully staunch the bleeding.\u201d<\/p>\n

The White House did not respond immediately to a request for comment, but U.S. Treasury Secretary Scott Bessent has said the yield spike is not unusual or worrisome, pinning the blame on professional investors who had borrowed too much and needed to sell.<\/p>\n

\u201cI think that it is an uncomfortable but normal deleveraging that’s going on,\u201d he told Fox News Thursday, adding that it \u201chappens every couple of years.\u201d<\/p>\n

The influence of the bond market<\/h4>\n

Trump acknowledged that the bond market played a role in his decision Wednesday to put a 90-day pause on many tariffs, saying investors \u201cwere getting a little queasy.\u201d<\/p>\n

If indeed it was the bond market, and not stocks, that made him change course, it wouldn’t come as a surprise.<\/p>\n

The bond market’s reaction to her tax and budget policy was behind the ouster of\u00a0United Kingdom\u2019s Liz Truss<\/a>\u00a0in 2022, whose 49 days made her Britain\u2019s shortest-serving prime minister. James Carville, adviser to former U.S. President Bill Clinton, also famously said he\u2019d like to be reincarnated as the bond market because of how much power it wields.<\/p>\n