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Big, Bad Bond Market Could Derail Trump’s Big, Beautiful Bill
"As the 2023 downgrade indicates, this change isn’t entirely due to Trump. Covid did a number on the US debt picture, with trillions of dollars in relief measures passed and implemented, and many months of lower revenues due to the 2020 recession. But in January, as Trump prepared to return to the White House, bond analysts were already forecasting higher rates, noting his penchant for tax cuts and lack of seriousness about deficits. On May 20, amid the tax fight in Congress, a batch of 20-year government bonds had trouble selling at auction, sending rates flying higher still. The bond market, it is fair to say, is not pleased with the direction this administration is going."
In addition to the high debt, US dollar falls against other currencies raises the question of whether the greenback still remains as the world safe heaven.
Fiscal worries have also given rise to a broad "sell America" theme that has seen dollar assets from stocks to Treasury bonds dropping in recent months.
CBLDX should do okay since it has short duration and David Sherman as the fund manager. At this juncture, I would sidestep long bonds.
The tariffs war is only starting and retail prices are rising as the merchants pass on the tariffs to consumers. FED may keep the current rate for longer periods, unless employment situation deteriorates rapidly. So far the unemployed rate is at 4.2% that has been steady for last several months.
Comments
https://reuters.com/business/weak-demand-japans-40-year-debt-auction-shows-fiscal-stress-2025-05-28/
In addition to the high debt, US dollar falls against other currencies raises the question of whether the greenback still remains as the world safe heaven. https://reuters.com/world/middle-east/us-dollar-declines-traders-assess-tariff-outlook-2025-06-02/
As for bond investors, it is time to diversify your bond holding elsewhere.
The tariffs war is only starting and retail prices are rising as the merchants pass on the tariffs to consumers. FED may keep the current rate for longer periods, unless employment situation deteriorates rapidly. So far the unemployed rate is at 4.2% that has been steady for last several months.