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241

US Treasuries sell-off deepens as ‘safe haven’ status challenged (www.ft.com)

submitted 3 days ago by [email protected] to c/[email protected]

26 comments fedilink hide all child comments

https://archive.is/wDANo

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[–] [email protected] 86 points 3 days ago (5 children)

The moves offer a new challenge to the Trump administration, which had previously cited lowering Treasury yields as a key policy aim, and could mark a loss of investor confidence in the world’s largest sovereign debt market.

“The sell-off may be signalling a regime shift whereby US Treasuries are no longer the global fixed-income safe haven,” said Ben Wiltshire, a rates strategist at Citi.

This is potentially a seismic shift in global finance/economics.

If US treasuries are no longer considered the "investment of last resort" (which they shouldn't be, since even sane Americans lack the commitment and risk tolerance to fight corruption and degeneracy in their own country), this may result in the dollar losing its status as the global reserve currency.

If that happens, the Americans will be fucked.

[–] [email protected] 53 points 3 days ago (1 children)

I have "US defaulting on its debt" on my Trump presidency bingo card. No one knows what happens if it comes to that.

I also have "US testing a nuclear warhead" on there, for what it's worth.

[–] [email protected] 31 points 3 days ago (1 children)

Trump on treasury

We’re even looking at Treasury. There could be a problem—you’ve been reading about that, with Treasuries, and that could be an interesting problem because it could be that a lot of those things don’t count. In other words, that some of that stuff that we’re finding is very fraudulent, therefore maybe we have less debt than we thought of. Think of that!

source: https://www.ft.com/content/7757e480-6aae-4a61-986e-52a2c2690f91

don't count = default

[–] [email protected] 3 points 2 days ago

Maybe they could have more debt than they thought. Think of that!

A thorough inspection could tip the balance either way.

Where's doge when you need em? 😄

[–] [email protected] 26 points 3 days ago (2 children)

US treasuries is literally what we used in university as the "risk free rate"

When you have government officials saying they want to default on the "risk free" bonds it undermines markets in a completely unprecedented way.

Shockingly stupid.

[–] [email protected] 14 points 3 days ago (1 children)

I don't think most people understand how critical this is. US treasuries losing safe haven status is the type of thing that will be taught in history books 80 years from now.

It will be like learning about Gavrilo Princip in 2025. Seemingly "meaningless" tedious historical facts, but at a closer look Princip (indirectly) shaped the course of much of human history in the 20th century.

[–] [email protected] 4 points 3 days ago

Last year there were rumblings about this exact thing happening and far too many people just blew it off.

Now the chickens have come home to roost and everyone is shocked. 🙄

[–] [email protected] 5 points 3 days ago

When you have government officials saying they want to default on the "risk free" bonds it undermines markets in a completely unprecedented way.

Shockingly stupid.

That last statement accurately describes the constituents of those government officials and large swathes if the American electorate. The fact that it's politically viable to muse about these things is so fucking idiotic . So many Americans owe their safe and prosperous lives to things of which they are completely ignorant.

[–] [email protected] 21 points 3 days ago (2 children)

Hi. American here. Us losing our reserve currency status is all I've wanted for half my life. It will be the deathblow to this evil fking empire and I can't wait to see it happen.

I know I'm boned. But knowing that the world at large can finally move beyond the regressive pull of the US gives me hope for the future.

[–] [email protected] 17 points 3 days ago (1 children)

The problem here is we don't have a better successor to our shitty system. China is likely to become the next dominant super power but we all know how fucked they've been to the Uyghurs, the Nepalese, India with border skirmishes, Asian mercantile boats through naval clashes, and practically every other country with their Wolf Warrior diplomacy. If fledgling markets thought US hegemony sucked, just think how China will treat them. They don't give a fuck about soft power.

[–] [email protected] 6 points 3 days ago

That's the real problem, China so far has made the Americans look good. But the way Americans are behaving (and their medium capabilities for reform) makes the calculus a little bit more complex.

[–] [email protected] 6 points 3 days ago (1 children)

Same.

Shit sucks for us, but lifting the US boot off the neck of the world will make up for it.

[–] [email protected] 10 points 3 days ago (1 children)

There are other boots waiting in line; we need to transition in a way that prevents dominating empires.

[–] [email protected] 2 points 3 days ago* (last edited 3 days ago)

Removing the US boot is a necessity first step.

[–] [email protected] 18 points 3 days ago (2 children)

Not just the American will be fuck. It will be a financial meltdown.

[–] [email protected] 4 points 3 days ago (1 children)

On one hand I agree with you. This won't only impact the US. Perhaps we'll get hit harder than the Americans (at least some parts of the world).

On the other hand I would argue the rest of the world is much more connected on a visceral level. The Americans have their feet and legs, when the world uses meters and centigrade. American prices are always provided on a list basis (and local oligarchs and their shills constantly lie that modern software solutions can't apply local tax adjustment algorithms on a dynamic basis), the rest of the world has true prices (only in English would one have to clarify what you mean by true prices).

I am not saying that only Americans will get fucked, but the rest of the world has a measure of dynamism that Americans don't (not to mention a much higher tolerance to challenges).

Perhaps there are some long terms benefits to Trump's behaviour. We can find alternative to American-style corruption and degeneracy. While there are many sane Americans, they also need to take a more sober attitude to their current situation and be willing to take risks and be less arrogant about "home of the brave" and similar polemics.

[–] [email protected] 3 points 3 days ago

Yes maybe like Lemmy, a more federated type trade rather than centralize financial/ currency wise. That will be great.

[–] [email protected] 3 points 3 days ago (1 children)

Sounds healthy in the long run. We have way too much financial economy leeching off of the real economy. It needs to melt down to a reasonable size.

[–] [email protected] 11 points 3 days ago (1 children)

be careful to what you wish for.

If U.S. Treasuries were to experience a significant meltdown, it could lead to a widespread erosion of trust in the bond market. Many countries rely on the issuance of bonds to finance essential infrastructure development—roads, bridges, schools, and hospitals. If borrowing costs rise sharply due to increased risk perceptions (not paying back/defaulting), governments may be forced to scale back or abandon critical projects. This could stifle economic growth, reduce job creation, and ultimately lead to a decline in living standards.

I don't disagree on your reasonable size point but there is a way to get there rather than breaking it.

[–] [email protected] 6 points 3 days ago (1 children)

Sounds like something that could be solved by proper taxation of wealth and profits from capital.

Like at the time when the US and other countries were experiencing their greatest economic boom, best infrastructure for the time and best access to education and economic opportunities.

[–] [email protected] 3 points 3 days ago

We still had treasuries and bonds to help finance that stuff even when we had a more progressive tax structure

[–] [email protected] 6 points 3 days ago

Euros or rmb as the new reserve currency? Place your bets now (literally if you like).

[–] [email protected] 28 points 3 days ago (1 children)

for context: The UK holds $723 billion in U.S. Treasuries, just behind China (excluding Hong Kong) at $759 billion. Canada has $379 billion, Belgium $375 billion, and France $332 billion, while Japan tops the list with $1,059 billion. This substantial investment offers significant leverage, creating numerous possibilities for retaliation or withdrawal and global chaos.

[–] [email protected] 2 points 3 days ago

That would make the dollar plummet and instantly end the furious import market, with no need for tariffs. With a devalued currency, it would make the country appealing to install industry back, even if low value at first, to soak up the throngs of unemployed.

And the current administration would wave away ratings and anything relating to international entitities and gladly default on their creditors, to pull everyone down.

These guys are mad but their madness has a method.

[–] [email protected] 14 points 3 days ago

Amazing. trump never ceases to do the stupidest, most idiotic, cruel, batshit fuckery imaginiable to cheering throngs of idiotic, cruel, batshit fucks.

[–] [email protected] -2 points 3 days ago