US Treasuries are trading like Emerging Market paper
May 22nd, 2025
Hello readers,
Most people don’t study economics in their life. Economics has held special interest with me. It is fascinating how large groups of people make financial decisions and their impacts. Most people suck at trading, myself included. Therefore, I listen to traders that have survived and are good at their craft. The coming disaster as the US enters the black hole of fascism will impact all of us and directly involves economics and trading.
I wanted to share three quotes with you. On the dollar falling even as yields surged.
The dollar couldn’t find a bid despite the yield surge, which tells you everything: this isn’t a growth story—it’s a credit story. USTs are starting to trade like EM paper. Regardless of the letters any credit rating agency assigns to U.S. paper, Washington is becoming a fiscal disaster zone, and markets don’t buy the “cost-neutral” spin from the White House. The bill’s arithmetic is fantasy, and everyone knows it.
-Stephen Innes, bold emphasis added
https://open.substack.com/pub/thedarksideoftheboom/p/fx-alert-traders-are-calling-bluff
On fascism risk premiums and markets being pro-Trump. To me, lacking knowledge of history, being incurious, and fixated on money explains all the magas I have met. The whole piece is worth reading that turning America fascist like Russia is bad for America’s growth prospects.
But the problem, as I’ve explained to you, is that the markets are pro-Trump to begin with. Not having read much in the way of history, being incurious, and being generally OK with the principle that money is the point of human existence, markets are now baffled at how to understand the relationship between fascism and risk and growth.”
-Umair Haque, emphasis the author’s
https://open.substack.com/pub/umairhaque/p/the-fascism-risk-premium-or-what
How the super rich went from paying taxes to collecting interest on federal debt payments. That flip explains why budget deficits and the total US federal debt keep increasing over time.
So instead of financing the government with their taxes, the super-rich have been financing the U.S. government by lending it money.
- Robert Reich
https://open.substack.com/pub/robertreich/p/omg-the-bond-vigilantes
Long term US 20-yr and 30-yr yields are now at the highest point over the last year. I expect the US 10-yr yields to follow. If the Fed or Treasury get involved and buy back debt, expect foreign owners to laugh at their good fortune and sell at above market prices and leave the Fed and Treasury holding the bag once interest rates climb higher.
Image courtesy of Stockcharts - 30 yr US Treasury yield
Image courtesy of Stockcharts - 20 yr US Treasury yield
Image courtesy of Stockcharts - 10 yr US Treasury yield
Share freely if it helps you. My musings will never be behind a paywall. Too much is at stake for me to gatekeep knowledge. -SomeNYDude