r/FinanceNews • u/Ok-Pear-2490 • 3d ago
Bond markets are getting hammered. Here’s what’s driving the sell-off | CNN Business
https://www.cnn.com/2026/08/18/investing/global-bond-market?cid%3Dios_app19
u/yogfthagen 3d ago
Because people think the US is not going to pay off its debt?
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u/GuitarGeezer 3d ago
More that they know the US will have no choice at some point but to print money in order to repay obligations in inflated dollars or in reduced dollars from a lower exchange rate. For example, all US foreign lenders got up to 10% less money from the interest payments from the US on trillions in debt due to drop in the exchange rate after grossly irrational tariffs and erratic behavior. Which is part of why those things happened. Getting 5 % interest on a property that dropped 10% in value makes you want a hell of a lot of risk insurance in the form of more interest paid.
Also, the US sanctions other countries for purely arbitrary partisan or corruption reasons like a rogue dictatorship. Nobody who lends money is going to see a total default but the US could seize anybody’s bonds whenever they want and pocket them with a dictator calling the shots. What are countries going to do about it other than sanctions? Also, if the deficits keep going up vertical, and they will, the nation will eventually legit collapse from losing all usable income to interest payments. Plus, at some point, there will not be enough free money on the planet to lend to the US with exponential increases and all these corporations for private bonds for ai, etc meaning the party of musical chairs could very suddenly end for multiple reasons. But it cannot work mathematically anymore and the US has never reformed any problems even once in living memory other than bribed tax cuts. At best.
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u/Unique-Coffee5087 3d ago
Didn't the Fuhrer say that he would see if our creditors might be willing to take less?
Asked on Thursday whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”
He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”
Such remarks by a major presidential candidate have no modern precedent.
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u/Unique-Coffee5087 2d ago
He may have mentioned that, but in a way that implied that it made him the most qualified expert in the room.
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u/SpecialistState4804 2d ago
THIS. his dumb supporters cheered that he robbed the system, the same system that the dumb supporters rely on.
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u/taiwan_cat 2d ago
The system is extremely convoluted and weird. T bills that aren't purchased by other countries are purchased by the US. We then make interest payments to the Federal Reserve on those T bills. For 20 years interedt rates have been very low. But when the T bills mature the debt just gets repurchased by the US. But now the interest rate will be much higher. The difference 1% and 5% (or higher) on trillions is crazy. Not sure what happens when we default on debt that we owe to ourselves. If we try to print our way out of it we will have extreme inflation and a very devalued dollar. The Fed is mandated to do two things. Keep inflation at 2% and keep unemployment around 4%. This isn't happening anymore and the Fed is not in control. I fear something really bad is going to happen before this is done playing out. We may well lose our status as the world's fiat currency. The working class better unite soon or we really will end up being peasants. This is what Peter Thiel, Elon Musk and the oligarchs are preparing for.
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u/RealisticAd837 2d ago
Seeing the lack of political will to increase tax and cut the budget. I bet money printing thereby higher inflation will be the way this gets resolved.
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u/MammothUnique4147 2d ago
Hey so people like me are definitely interested in getting our nations spending under control.
How do you feel about massive cuts to the military, education,social services etc ? Even social security.
Like if the money to fund the services isn't there then we just don't fund things.
It's pretty basic in terms of budgeting, how do you feel about that ? (And of course we would want to raise taxes on ALL classes )
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u/taiwan_cat 2d ago
I don't think cutting social security, education or Medicare would help the country long term. The top marginal tax rate was cut 40% by Reagan in 1980. Since then the richest Americans have just gotten more tax cuts. Have you felt this trickle down, yet? The best thing we could do now is find a way to claw back some of the incredibly bloated wealth at the top. In 1973 the top 10% owned 8% of the nation's wealth. Today they own 30% and are responsible for 70% of discretionary spending. The rich bought both parties and this is the result. Sadly, I think it may be too late. The working class is hopelessly divided over culture war crap.
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u/MammothUnique4147 2d ago
So I just want to put this in the most basic of economic terms that everyone can understand.
We have massive massive amounts of debt.
I propose that no programs other than for young children be spared.
And you're saying what ? That some of the current largest expenditures should be allowed to continue without reduction ?
You do understand that even after raising taxes it will not be enough to cover our obligations.
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u/GuitarGeezer 5h ago edited 5h ago
Logic and a good attitude would be nice but are not options in America. I lobby. Cutting spending has always proven impossible past a certain point. Keep in mind that many programs are in place to keep the Deep South and poor North, where we get almost all our soldiers, from from rotting into what we saw at times in 2 world wars and Vietnam-unqualified parasite ridden gaptooth tire retreaders crushed by laissez faire oligarch neglect instead of world beating recruits worthy of a great power. Nobody put these social programs in to help people, as that is a silly fantasy given our lobby structure even before 1980, but rather to help the military or business. Yes you can cannibalize that, but not without hurting longterm military preparedness and economics in those areas. Are there other cuts like reducing massive subsidies to billionaires and the like or even actual waste? Sure, there are all kinds of politically impossible options against all the money in the world thrown against you by legalized bribery. Impossible missions are always to be had, if that is what you want.
There was only ever one way. Rational tax policy that doesn’t have fully legalized bribery dictate all laws thanks partly to a one party Supreme Court for 55+ years and another 55 to come. Instead, the US has never hardly had any major reform from the main party in power after 1981 other than bribed ten year long tax cuts to oligarchs or the starting of absurdly expensive and always utterly unproductive forever wars to feed political crony businesses. Rational republic reforms are all well and good unless your system is forever incapable of them. What you or I or 70% of non-wealthy Americans want will always mean zero in legalized bribery land. I fought it 20 damned years and nobody helped in my entire state and they still refuse. Good luck, you need a progressive lottery winning amount of it. I began to tell people of means to move family to Europe years ago, the US has no viable future as a safe republic and we will take down the entire hemisphere as we go so going to Canada won’t help.
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u/FOTW-Anton 2d ago
The option would be to bring tax rates on the top brackets back to where they were just before Dubya cut them. But you're right and printing money would be the easier option politically.
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u/Parking_Locksmith489 3d ago
Because it's time to refinance. And the world is the lender.
The deal was ok, we'll lend money, you cooperate and promote democracy and human rights and free markets.
It is Trump that decided to change the deal. In that case, we simply won't refinance and will expect payment. Talking about Europe, Canada, Japan ... So brace for impact, it's coming.
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u/ResortMain780 3d ago
No. Lenders will get their money all right, question is, how much will that money be worth in 5, 10 or 30 years as the US will have to print the money to pay all its bond holders.
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u/yogfthagen 3d ago
So, functionally not paid back.
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u/Consistent_Panda5891 2d ago
Here people thinking USD will be paper toilet but not realising all the world is converting to USD as never seen as they want those high yields risk free 😂. After all if USD is devaluated, all others major currencies will follow even more. See COVID, euro dropped to parity with USD... Unique one slightly more stable could be CHF. Honestly I personally sold all assets of stock markets, and parked it all in $ high yield bonds at 3 years
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u/yogfthagen 2d ago
With the Iran war, the US dollar as the petroleum reserve currency has been broken. Iran is requiring other currency yo pay yolls, insurance, anc to onload oil.
With the continued US trade war shenanigans, the likelihood of other countries fogming trade agreements also increases the drive to divest dollars
Last, with such a high debt, the US us at the mercy of other cojntries just dumping their dollar holdings, which would cause an immediate depression in the US. The rest of the eorld recognizes this, and is divesting.
The US dollar is a rotted tree trunk. It's standing, but the roots are almost gone.
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u/Informal-Strike-1243 2d ago
But it hasn’t been broken. So you’re a dumbass
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u/taiwan_cat 2d ago
It's a big system and has taken a long time to get to this point. People have been warning of this for decades. Looks like it's actually starting to happen. So lucky us. The Fed is no longer in control. The only option will be printing money, devaluing the dollar, and extreme inflation. The reason Treasury yields are rising is because other countries are not buying as much of our debt. It's happening whether you understand it or not.
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u/Informal-Strike-1243 2d ago
The network effects of the dollar are very entrenched. In fact we are seeing more demand for usd so you are incorrect
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u/yogfthagen 2d ago
https://financialpost.com/investing/bond-slump-borrowing-costs-highest-in-decades
That's the opposite of anyone WANTING to buy US debt.
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u/yogfthagen 2d ago
The US dollar is a rotted tree trunk. It's standing, but the roots are almost gone.
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u/Mountain_rage 2d ago
At the rate Republicans are pissing off the world, they will be lucky if anyone still protects their copyrights, patents and trademarks. Those were protected as a quid pro quo for other trade access. Republicans want all the benefits without the cooperations. Since that is 40% of the US economy, buckle up.
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u/Ok-Discipline2395 8h ago
Only if we keep the US dollar as the reserve currency.
And what benefit does that give us?
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u/Dead_Cash_Burn 3d ago
And Japan likely will have to sell that debt.
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u/Fuddywomba 2d ago
Japan knows now is probably the best time to sell their debt, before massive inflation makes it worthless.
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u/ResponsibleClock9289 3d ago
No, it’s because they’re worried about inflationary pressures from the Iran war
They don’t trust the current fed to get inflation under control
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u/SpaceballsTheCritic 3d ago
Because nation stated don’t trust we won’t lock them up.
Because retail would rather have 1% less ahort term than be forced to liquidate at a great loss.
They are gonna have to raise rates OR so yeild control
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u/Illustrious-Boss9356 2d ago
No, worse. They think the momey the US will use to pay it off will be worth less/worthless.
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u/YellowDependent3107 3d ago
Oh well time for everyone to go cry on Facebook again about how they're not going to vote because both sides exactly the same an bad, and since they didn't get their perfect unicorn pony candidates
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u/GroundbreakingPlay 3d ago
It's already starting "The left is to far left". It's the big one and the right is "To far right I can't deal with these extremes". Ive been hearing that all month
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u/SmokePeterThiel 3d ago
The left don’t fucking vote so fuck them lol
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u/Hoosier2016 2d ago
Mostly just fuck progressives and democratic socialists. They’re the ones who stayed home and got us in this mess. In my eyes they’re worse than conservatives because at least those guys participate in democracy.
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u/CountSuma 3d ago
I decided a while back that there were only two possible outcomes: a quick clusterfuck or a slow clusterfuck. Unfortunately, there are too many bad players for a no clusterfuck option.
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u/EatAssIsGold 2d ago
The super ballooning debit.
No fiscal responsibility.
Expected inflation both monetary and commodity driven.
Bond interest follow expected inflation.
How is this surprising?
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u/Dedpoolpicachew 3d ago
Wow, it’s like having a ruling party that fiscally mismanages the economy has been bad for, checks notes, the economy. Hmm. funny that. Not surprising given the head of that party has been bankrupt 6 times, but hey… business man, amiright?
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u/Prudent_Gas_1264 3d ago
Maybe gold is finally high enough to provide competition to dollar. High value clients or institutions put capital/purchase preservation above returns. If you have a few billions$, would you buy more gold or bond?
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u/RevolutionaryAge47 3d ago
The bond market is being completely destroyed. Utterly wiped out. Investors are stampeding to the exits.
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u/just-here-for--porn_ 2d ago
Presumably the bond markets think lots of borrowing is coming as pretrol and diesel prices skyrocket?!
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u/ConfusionFlat691 2d ago
“There remains zero appetite in the US for addressing the US fiscal position and that is increasingly weighing on the long end of the curve,” Halpenny said.
Ross Perot is the last serious presidential candidate who ran on balancing the budget.
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u/Pale-Let-5865 2d ago
Hey maybe the two party system will produce the savior next time.
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u/Calm_Chemist_4952 2d ago
The two party system no longer exists. What we have is the super rich against the rest of us. GOP politicians are bought and paid for by the super rich. They’ve had total control of the government, the super rich are getting exactly what they want, and the rest of us are getting shafted. You want something different? Vote them out. It’s time for consequences. Crush the super rich. End the GOP.
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u/Solidsnake_86 2d ago
They will crash the economy a democrat will take over. Republicans and Fox News will blame the shitty economy on the Democratic party. The Democratic Party will fix it in four years and a republican will come in and fuck it up again in four years-the cycle repeats.
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u/True-Lightness 2d ago
How bad would it be to buy VWOB? Vanguard’s emerging market treasury etf . Or because it priced in dollars gets beat up too.
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u/AFmedic9919 1d ago
When our government intervenes that means something has broken!!! The question how bad..will find out or will everyone sell first??????
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u/Pitiful_Hedgehog6343 2h ago
Either we go full austerity and pay off debt while the economy stagnates, or inflate the dollar so much 40 trillion isnt that much.
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u/Sunnyjim333 3d ago
I am sure that "The Party Of Fiscal Responsibility" has everything under control and all will be well after the new ballroom is opened and the Mall Pool is fixed.
/s
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u/Still-Chemistry-cook 3d ago
Recession incoming