The bond market is acting weird. It spooked Trump
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Chip Hughey, managing director for fixed income at Truist Advisory Services, said hedge funds are also unwinding bets tied to Treasuries, which could be contributing to higher yields. Demand at an auction for 10-year Treasuries on Wednesday was strong, according to Hughey, and he thinks yields could fall more as hedge funds tie up their trades.
Trump’s tariffs have also raised concerns that international investors might sell their Treasuries as a negotiating tactic. And Hughey said that if there is less being imported into the US from its global trading partners, that could disrupt demand for US Treasuries. Less trade with the US means foreign investors have fewer dollars to buy US Treasuries.
The US dollar index, which measures the dollar’s strength against six major foreign currencies, tumbled 1.8% on Thursday, a possible warning sign about waning investor confidence in the United States.
“Our stock market is down. Bond yields are up and the dollar is declining. These are not the markers of successful policy,” Trump ally and investor Bill Ackman said in a post on X on Wednesday before Trump reversed his tariff policy.
“Bonds are signaling that the pause is significant, yet not much has fundamentally changed,” said ING analysts in a note to investors Thursday. “Markets will not easily forget these episodes with wide market swings.”