Good! This is the EXACT type of 5D Chess we NEED Right Now! Although if Tomorrow Trump says this is BAD then it’s BIDENS FAULT!
-Free Thinking Republicans!
There’s a theory being batted around without too much evidence (hold tight, Snopes is on it) that Mark Carney talked European and Japanese leaders into accumulating US Treasury bonds, and then slow-selling them to make Trump squirm once he imposed the broad-brush tariffs to spook the T-bill market.
The theory sounds mostly plausible in that Carney was in Europe for closed door meetings with European leaders shortly after being designated PM, and that Trump backed off so quickly and used the language of “the bond market is tricky” to justify the change in direction. Dropping demand for T-bills leads the Fed to increase yields to keep the borrowing taps on, means expensive borrowing for them, means no money for tax cuts for billionaires.
On the other hand, the story originates from a twice-fired shock-jock’s Substack.
But it sounds like something a wicked smart Harvard/Oxford educated economist would dream up and pull off…
¯\(ツ)/¯
Isn’t a much simpler answer that China started dumping bonds, and they’ll dump a lot more if the tarriff situation isn’t resolved soon?
As a real estate investor who’s mortgaged to the max, Trump wants high inflation to increase the nominal value of his properties, and low interest rates. China has extensive US bond holdings and at least some ability to drive up 10 year rates by selling those bonds. Trump doesn’t want higher rates, even if you only consider his direct, personal situation.
That was my initial reaction, thinking China MUST hold more treasury bonds than anyone else, right? Turns out that’s typically Japan ($1 trillion), and the UK has generally held roughly the same number as China (both in the $700B range). Maybe the US anticipated and had contingencies ready if it was just China doing the selling, but when the other big holders started a slow bleed, it might’ve given them pause? Dunno.
We also don’t know who held what more recently than January and I don’t know if the data gap is the usual lag or if the the people who do this work at the Treasury department got “DOGE’d”.
Bottom line, it’s been fun to think about but I don’t think we should put too much stock in conspiracy theories originating on Substack.
“Picking fights with major trading partners who also finance your debt becomes especially risky with a wide fiscal deficit and no credible plan to rein it in,” Mr. Eagan said.
Oh, snap!
Blyat!