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What If Trump Just Repudiates America’s Debt?
There are still no clear answers as to what happened to Treasurys to start the week when, despite ve
Trump vs Obama 2028, provided the latter doesn’t have an unfortunate heart attack.
Scary stuff, even the likes of Fidelity tie all the fixed interest and money market funds to treasuries; surely if Trump pulled a stunt like that it would crash the entire US financial system.
Seems someone is telling him to crash it and that he can be the hero with a new financial world order. Since we were already at the top of the heap, USD being entrenched and all, why would someone want things to change, and to be replaced with what? Maybe crypto’s the what. Who is the who? Maybe the Fed is on board. Maybe “de-centralized” was how the idea got sold. Brilliant trojan horse with a MLM/ponzi twist, to replace the old ponzi scheme You get in early enough you get filthy rich all while paving the way towards legitmacy. The rules are changing.
Financial and economic winter. Everywhere except where penguins live. Maybe I’ll try to get to Mendoza. I’ll work on my grape harvesting skills in the meantime.
Would be interesting to hear from @therealheisenberg what would happen to the Eurodollar market…wait, forget about it. It would all end. There are no buyers. We are all poor. “The Mandibles.” Barron Trump is monarch.
Ouch. It’s not like I hadn’t thought of this, but to hear it from you hurts more.
I mean, you know, it’s not a “tomorrow” thing, and I don’t think it’s likely to affect your TLT, etc., but just saying “You know what? F-ck everybody, and while I’m at it, f-ck the rule of law too,” is the sort of thing you don’t do if you want to keep people buying your bonds.
Weak auction 3Y.
Yeah, and here’s the standout stat from that: Directs took just 6.2% against a 19% average. Indirects award was 73%, well above the 65% norm. Ultimately, non-dealers participation was weakest in ~15 months
Yikes, long-end really selling off again now.
I’m afraid to look tomorrow morning… You mentioned if we loose the long end god help us.
https://heisenbergreport.com/2025/04/08/scott-my-friend-you-may-have-a-problem/
@therealheisenberg, likely I’m naïve… If the administration is truly concerned about the state of the budget and deficits in general, why not tweak the obvious levers, reduce spending by 2-3% increase the tax by 2-3%, this will give a predictable path to sustainable deficits… so obviously, budget shortcomings are just a red herring. Also, for manufacturing jobs onshoring, if that is the goal, tweak the corporate tax code to encourage creation of US jobs and deter offshoring, no need to blow-up the system
You’re exactly right. They’re not concerned about anything they say they’re concerned with. This is just a bunch of people riding the coattails of a demagogue hoping to parlay his movement into big political and/or financial windfalls for themselves. In Congress, a lot of it’s just survival instincts. Trump doesn’t care. He’s a populist autocrat and he’s running that playbook: Quick fixes for structural problems and use the levers of government to consolidate power in his office and line the pockets of his friends.
Which friends pockets are being lined though? I see a lot of people, musk included getting killed here.
What you see are the daily swings in the market value of a few billionaires’ stock holdings in their own companies. Not nothin’, to be sure, but I’m talking about literal, old school pocket-lining.
If I had an extra $25 million in crypto, I would surely find some usefulness in taking the President out for a spin. Oh! The things I could buy!
I’ll tell you, though, what really is scaring me is that it’s oligarch money helping to fuel the best chaos making they can get.
I think the treasury action over the past 3-4 days is the tip of the iceberg as far as underlying issues and is a huge red flag. The fed has lost control of things for several years and the borrowing costs are not going to come down in the new banana republic. Mix that up with some constant inflation from tariffs and other MAGA Machismo and this likely will not end well. Gold and maybe land are likely the only assets to hold your cash at this point if this keeps going. Not good!
Maybe the recent long end selloff is the basis trade blowing up on the surge in rate vol? Noticed USD swap spreads narrowing (and getting even more negative)
Seems like a Treasury haircut would be unhedgeable. Can’t imagine how any financial asset would be left unscathed. Back in the GFC days there was a weekend when it wasn’t clear ATM’s would continue to function. That was from mortgage debt. Seems like Treasuries would be worse.
During the great depression, real estate was a problem too. Still had to pay the property taxes. And as an aside, it became illegal to hold gold privately.
Too ugly to contemplate. Yet contemplate we must…
TLDR: Would you lend to this clown at 4-5%?
remember the UK Gilts fiasco of 2023?
Turns out that another way of looking at the higher tariffs collected by other countries vs. the tariffs that other countries were paying to the US, as well as the trade deficits of the US, were the equivalent of “points”. As in points that are paid by a borrower to a lender in order to secure a lower interest rate on borrowing.
Trump has made a career out of screwing his creditors… Just saying…
One of the main bases of the success of western economies has been rule of law. If you don’t have that, you are just another Zimbabwe, Myanmar, Russia or ??? (You choose).
Where are those brave Republican congresswomen and men when America really needs them? What’s your senate up to? Cowering in a corner? Are we living a Hollywood movie?
Yeah, this is the underlying problem. But nobody on Wall Street can say it. Why not? Well because if they do, Trump will come after them, for now by calling up Dimon (or whoever), but who knows, maybe a year from now by sending somebody to individual analysts’ homes, like Xi does. That’s how quickly the logic becomes circular when the rule of law goes away: “I can’t comment on the rule of law, because there’s no rule of law.”
The man has lived the lie this long, you think he gives a sh*t?