First thing Monday, I not-so-gently chided Scott Bessent for what, in my view anyway, was a disingenuous attempt to downplay losses for US equities associated with the chaos surrounding the Trump administration’s botched “reciprocal” tariff rollout.

The inescapable bottom line — and notwithstanding some Wall Street strategists’ increasingly belabored attempts to explain away this year’s stock losses as evidence of Donald Trump’s determination to prioritize Main Street’s “interests,” as though regular people whose 401(k)s took a hit in Q1 are somehow comforted by the notion that the ratio of US equity market cap to GDP’s lower now than it was in January — is that Trump didn’t set out to engineer a stock selloff. Nor all the bad press that goes along with it.

Anybody who suggests as much — and, again, there are some on Wall Street still suggesting this is all part of the plan — is either trying to explain away a bad choice on November 5 or else at risk of Kool-Aid poisoning.

It’s not just stocks. The rapid demise of US exceptionalism (which mirrors the fast-motion dissolution of American democracy) is readily apparent in bond land too.

The figure below shows the YTD performance of global sovereign debt excluding US Treasurys, developed market sovereign debt also excluding US Treasurys and US Treasurys themselves.

You don’t even need the annotation. It’s obvious where things went awry, and if you haven’t been asleep for the past month, you know how to label the dashed, vertical line.

Blame a basis blowup for exacerbating the situation if you like (i.e., blame hedge funds), but I’d note that identifying an accelerant isn’t the same as identifying the culprit.

“Up until President Trump’s ‘reciprocal’ tariffs announcement on April 2, Treasurys and the ‘G6’ (G7 ex-US) had performed largely in unison with both the Bloomberg US Treasury Index and the Bloomberg Global G7 ex-US Index up +3.2% YTD as of April 1,” BMO’s Ian Lyngen remarked. “Trump’s tariff announcements triggered a selloff in Treasurys that severed their former correlation with government bonds in the rest of the G7, as the ‘G6′ rallied sharply.”

In the same note, Lyngen said Treasurys’ underperformance is down to a variety of factors, including cash-raising needs in the panicked sessions following April 2. As to whether talk of a foreign buyers’ strike has merit, Lyngen nodded to the argument that the selling “was primarily by domestic investors who feared selling overseas.” I’m not sure that’s any better, frankly. It almost suggests a kind of “Oh God, if overseas investors come around to the reality of how much crazier this is than Trump’s first term, they’re gonna to sell, so we gotta get out ahead of them”-type dynamic.

Meanwhile, the term premium reached 84bps on April 17.

As the figure shows, that’s more than 30bps wider than the highs witnessed in late-summer/early-autumn of 2023, when investors were concerned about oversupply at a time when the buyer base for Treasurys was shifting in favor of price-sensitive investors.

“Let us not forget the surge in term premium,” Lyngen went on. Investors are now “demand[ing] excess compensation for bearing the risks associated with President Trump’s erratic behavior.”