Treasury bonds with Trump's nightmare? “End of the financial age of the USA supremacy”

Donald Trump explained the decision to suspend their duties for 90 days with “little fears” of people. The real cause was “panic bordering” the concern about the White House market – says NBC News. As “Economist” said, the bonds have become the most important opponent of the US president.

“I used to think that if there is reincarnation, I would like to return as a president or pope (…)

In this way, Carville summed up the increases in the interest rate of federal debt papers, later called the “great massacre of bonds”, which forced the White House in 1994 to change the course.

“The ability of the bond market to correct government policy is well documented,” says Al -Jazira television. A good example of their importance is the story of the former prime minister of Great Britain Liz Truss, who had to give up the function after 49 days of office, when the interest rate on British bonds increased rapidly, which was a reaction to the budget of the tax cuts presented by her.

The high profitability of US government bonds, called Treasuries, means the rising costs of repayment of the colossal debt of America. The constant demand for these papers allows the United States to easily and cheaply obtain financing on the market, without exaggerated fears of credit costs.

Treasuries is considered the safest bonds in the world, guaranteed by the power of the American economy. But behind the universal faith in Treasuries there is also a belief in America's rule of law and the stability of its government system. These are such important qualities for the world system that the risk of related to all other investments is measured in relation to American bonds. This applies to all financial instruments, including mortgage loans, bank interest rates, business operating costs, or credit card interest rates.

After April 2, when Trump announced the implementation of customs duties, the interest rate on 30-year bonds jumped at most since 1982. The profitability of 10 -year -old papers “scored the most serious increase in a quarter of a century,” New York Times said.

There have been fears – reports “Washington Post” – that not only investors, but also foreign central banks sell Treasuries. Further panic “would mean the end of the financial age of the US supplies, and markets would lose confidence in the value of shares, bonds and other assets around the world” – explains the Washington daily.

The sale of bonds and an increase in their profitability scared the White House that the president suspended the duties. Last weekend, however, he told journalists: “The bond market is doing well. It had a small moment (turmoil), but I solved this problem very quickly. I am very good in these matters.”

NBC News television, which reports these events on Tuesday, emphasizes that Trump's “every element” of Trump's statements is true, considering that Deutsche Bank said that US government bonds can probably “lose their traditional status” of the safest debt papers in the world.

The profitability of 10 -year bonds is considered one of the most important meters of the condition of the economy – reminds CNN. Thus, although the termination of the trade war to the rest of the world by Trump caused decreases on stock exchanges around the world, it was the situation on the bond market that economists considered a symptom of the upcoming economic crisis – comments Al -Jazira.

The sale of bonds has been widely recognized as a serious warning for Washington, because it means that investors lose their belief that the US will be able to honor their debt in the long run. “This is a very serious signal” because investors are uncertain about the “direction in which the US economy is heading,” a economist from the University of California in Berkeley Anastassia Fedyk said in an interview with Al -Jazra.

The suspension of customs by Trump calmed the markets for a moment, but the implications of his policy and trade war are still disturbing economists, investors and politicians. “The whole world has come to the conclusion that the US government has no idea what it is doing,” said in an interview with NBC News Mark Blyth, a political scientist at the BROWNA University, Rhode Island.

Marta Fita-Czuchnowska (PAP)

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