Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
"U.S. President Donald Trump’s erratic tariff moves have led to wild swings in U.S. government debt over the past week by not only undermining confidence in the economy, but also the direction of U.S. policy and America’s standing in the world. That’s eroding appetite for U.S. assets and is undermining the status of the federal government’s debt as the world’s most risk-free asset against which virtually everything else is priced." https://www.bnnbloomberg.ca/investing/2025/04/11/us-treasuries-slide-with-selloff-worst-since-2019-repo-blowout/
For sure. Liquidity issues among some big players were rumored last week. Shortage of cash in the system to cover losses. Perhaps the “elephant in the room” owing to the amount of leverage / speculation in the system. Credit markets were primed. T just lit the fuse.
The UST's found basis point increases (higher yields) in the range of .20 - 50 last week, for the shorter duration through the long duration. This Monday morning finds lower yields in the .05 basis point area. So, a small victory as of 9pm, Monday morning. Last week had very large percentage losses for the 'common, non-complex' bond funds ranging from a -3.3% for LQD to -2.5% for plain jane funds as; AGG, FBND, BAGIX and many other 'core or core+' funds. Sadly, one can't rely on what 'announcements' will arrive from DC at any given moment. We're having fun, eh ??? Hang in there. Green in bonds and equity so far, in the pre-markets, at 9:10AM. Remain curious, Catch
Think what we are seeing now is a dead cat bounce. Damages have already been done to the bond market and US greenback. There may be hard to turn this around, but no one know from what is coming from DC.
Fact is that just about all bonds you mentioned above fell last week and the magnitude is worrisome. UST was supposedly the heaven of the last resort and that changed last week as investors fled and bond market went into a free fall. Among several treads posted here, there was sizable amount of treasury sold last week. Many point to hedge funds as part of the short squeeze. There may be other actors involved such as foreign countries. This is far from over.
We are already in a conservative allocation, thus we have done nothing. Going forward, we will shift more stocks and bonds away from US, and also let cash position grow.
We can only wish ! That power belongs to the emperor without clothing.
The bond market is much bigger than the stock market and it controls money flow across the globe. When the confidence on the supposedly safe asset, US treasury is shaken, what we are witnessing last week can get worse.
Gold is moving up to well over $3,000 an ounce. I can only wish I am all in gold.
For those who don’t know, this is how it is done. DT was backed into a corner and had no choice. He was beaten. "Let’s talk about the moment Donald Trump blinked. It wasn’t loud. It wasn’t a tweetstorm or a rally rant. When the tariff threats that had the world on edge — 125% on China, 25% on Canada’s autos, a global trade war in the making — suddenly softened. A 'pause,' he called it. A complete turnaround from the chest-thumping of the past week. And the reason? Mark Carney and a slow, deliberate financial maneuver that most people didn’t even notice: the coordinated Treasury bond slow bleed. This wasn’t about bravado. It was about leverage. Cold, calculated, and devastatingly effective. Trump’s pause wasn’t because people were getting yippy… Rewind a bit. While Trump was gearing up his trade war machine, Carney, Canada’s Prime Minister, wasn’t just sitting in Ottawa twiddling his thumbs. He’d been quietly increasing Canada’s holdings of U.S. Treasury bonds—over $350 billion worth by early 2025, part of the $8.53 trillion foreign countries hold in U.S. debt. On the surface, it looked like a safe play, a hedge against economic chaos. But it wasn’t just defense. It was a loaded gun. Carney didn’t stop there. He took his case to Europe. Not for photo ops, but for closed-door meetings with the EU’s heavy hitters — Germany, France, the Netherlands. Japan was in the room too, listening closely. The pitch was simple: if Trump went too far with tariffs, Canada wouldn’t just retaliate with duties on American cars or steel. It would start offloading those Treasury bonds. Not a fire sale — nothing so crude. A slow, steady bleed. A signal to the markets that the U.S. dollar’s perch wasn’t so secure.
---Dean Blundell, Canadian radio host. Some might say, "shock-jock." But even a broken clock is correct, twice per day.
@Crash, thanks for the very informative data. I know Japan and China are #1 and #2, respective largest UST holders. Where is Canada rank?
I have to spend more time to learn from the Canadians.
BTW, we have had great time visiting British Columbia province. Beautiful landscape, friendly folks, and great cuisines (very divers from all former British colonies around the world).
Edit: don’t know when we visit Canada again. We are now the ugly Americans.
Two comments. Volatility creates opportunities. Injecting daily politics as a basis for investment analysis isn't a good choice.
Heightened volatility due to massive uncertainty increases the likelihood of a serious "accident." It's unwise to ignore the ramifications of executive branch actions which forcefully inject politics into the business/economic realms.
Thanks @catch22. Great article. For sure Canada have leverage to counteract bullies. Think other countries are thinking the same strategy to affect US’s bond market and currency.
If one follows our great MFO contributor, @lynnbolin and @davidsnowball, who lay out their investment strategies in details so they can counteract market risk. Most of all, these information are available to everyone here month after month.
@Crash, "Snopes has yet to confirm that Carney orchestrated a U.S. Treasurys sell-off in closed-door meetings with European and Japanese leaders. We contacted Blundell to ask how he first came upon the information he relayed in his newsletter. We will update this report should he respond." https://www.snopes.com/news/2025/04/11/canada-mark-carney-treasurys-sell-off/
"Carney, Canada’s Prime Minister, wasn’t just sitting in Ottawa twiddling his thumbs. He’d been quietly increasing Canada’s holdings of U.S. Treasury bonds—over $350 billion worth by early 2025, part of the $8.53 trillion foreign countries hold in U.S. debt."
Carney's term as Canadian PM started only on 3/14/25.
Sure, he has connections as the former B.O.C and B.O.E Governor, but above seems a wild speculation.
But something strange is going on. Typically, when stocks fall, there is flight-to-safety into Treasuries and Treasury yields go down. But that isn't happening lately, so someone is selling lots of Treasuries to spoil the flight-to-safety phenomenon. Moreover, some flight-to-safety has been into German and Japanese bonds.
Help me with the reasons for why foreign countries hold US Treasuries.
Trade is one very big reason.
The US, for many years, exported US inflation by buying cheaper imports from around the world.
These countries, in turn, brought US Treasuries to absorb those purchases and control inflation in their respective economies.
UST are a shock absorber for dealing with inflation and a benefit to both parties.
Selling Treasuries comes with it's own set of risks by the countries that hold them, but potentially a bigger risk when they sell them as it can be inflationary for their economies.
In the past, the US encouraged foreigners to hold $s & invest in Treasuries.
OPEC is source of petrodollars.
When US-China relations were good, the former Treasury Secretary Rubin made several trips to China to convince it to buy US Treasuries. Rumors were that US TIPS were launched in late 1990s to address China's concerns about US inflation - other countries had TIPS for decades. Of course, now is different, & China is no longer #1 holder of Treasuries, & may soon be #3 (from current #2).
Comments
For sure. Liquidity issues among some big players were rumored last week. Shortage of cash in the system to cover losses. Perhaps the “elephant in the room” owing to the amount of leverage / speculation in the system. Credit markets were primed. T just lit the fuse.
Story: Fed official says Fed ready to intervene if necessary.
Here’s an earlier link to the FT posted in a different thread by @equalizer
FYI, the future market for 2, 5, 10, and 30 years Treasuries are up slightly.
https://finviz.com/futures.ashx
Let’s see how the bond market plays out next week.
Remain curious,
Catch
Fact is that just about all bonds you mentioned above fell last week and the magnitude is worrisome. UST was supposedly the heaven of the last resort and that changed last week as investors fled and bond market went into a free fall. Among several treads posted here, there was sizable amount of treasury sold last week. Many point to hedge funds as part of the short squeeze. There may be other actors involved such as foreign countries. This is far from over.
We are already in a conservative allocation, thus we have done nothing. Going forward, we will shift more stocks and bonds away from US, and also let cash position grow.
The bond market is much bigger than the stock market and it controls money flow across the globe. When the confidence on the supposedly safe asset, US treasury is shaken, what we are witnessing last week can get worse.
Gold is moving up to well over $3,000 an ounce. I can only wish I am all in gold.
Volatility creates opportunities.
Injecting daily politics as a basis for investment analysis isn't a good choice.
d"Let’s talk about the moment Donald Trump blinked. It wasn’t loud. It wasn’t a tweetstorm or a rally rant. When the tariff threats that had the world on edge — 125% on China, 25% on Canada’s autos, a global trade war in the making — suddenly softened. A 'pause,' he called it. A complete turnaround from the chest-thumping of the past week. And the reason? Mark Carney and a slow, deliberate financial maneuver that most people didn’t even notice: the coordinated Treasury bond slow bleed.
This wasn’t about bravado. It was about leverage. Cold, calculated, and devastatingly effective.
Trump’s pause wasn’t because people were getting yippy…
Rewind a bit. While Trump was gearing up his trade war machine, Carney, Canada’s Prime Minister, wasn’t just sitting in Ottawa twiddling his thumbs. He’d been quietly increasing Canada’s holdings of U.S. Treasury bonds—over $350 billion worth by early 2025, part of the $8.53 trillion foreign countries hold in U.S. debt. On the surface, it looked like a safe play, a hedge against economic chaos. But it wasn’t just defense. It was a loaded gun.
Carney didn’t stop there. He took his case to Europe. Not for photo ops, but for closed-door meetings with the EU’s heavy hitters — Germany, France, the Netherlands. Japan was in the room too, listening closely. The pitch was simple: if Trump went too far with tariffs, Canada wouldn’t just retaliate with duties on American cars or steel. It would start offloading those Treasury bonds. Not a fire sale — nothing so crude. A slow, steady bleed. A signal to the markets that the U.S. dollar’s perch wasn’t so secure.
---Dean Blundell, Canadian radio host. Some might say, "shock-jock." But even a broken clock is correct, twice per day.
I have to spend more time to learn from the Canadians.
BTW, we have had great time visiting British Columbia province. Beautiful landscape, friendly folks, and great cuisines (very divers from all former British colonies around the world).
Edit: don’t know when we visit Canada again. We are now the ugly Americans.
Source: U.S. Treasury
LINK:
Canada and Treasuries are in this article.
It's unwise to ignore the ramifications of executive branch actions which forcefully inject politics
into the business/economic realms.
--- AGG = +.57% (I-Shares Core bond), a benchmark, (AAA-BBB holdings)
--- MINT = +.05% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = +.22% (UST 1-3 yr bills)
--- IEF = +.80% (UST 7-10 yr bonds)
--- TIP = +.48% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- TLT = +.71% (I Shares 20+ Yr UST Bond
--- BAGIX = +.62% Baird Aggregate Bond Fund (active managed, plain vanilla, high quality bond fund)
--- LQD = +.61% (I Shares IG, corp. bonds)
--- HYG = +.50% (I Shares High Yield bonds, proxy ETF)
Both DODIX and PIMIX up correspondingly. About 0.7%.
If one follows our great MFO contributor, @lynnbolin and @davidsnowball, who lay out their investment strategies in details so they can counteract market risk. Most of all, these information are available to everyone here month after month.
Lynn and David, thank you !
"Snopes has yet to confirm that Carney orchestrated a U.S. Treasurys sell-off in closed-door meetings
with European and Japanese leaders. We contacted Blundell to ask how he first came upon the information
he relayed in his newsletter. We will update this report should he respond."
https://www.snopes.com/news/2025/04/11/canada-mark-carney-treasurys-sell-off/
Carney's term as Canadian PM started only on 3/14/25.
Sure, he has connections as the former B.O.C and B.O.E Governor, but above seems a wild speculation.
But something strange is going on. Typically, when stocks fall, there is flight-to-safety into Treasuries and Treasury yields go down. But that isn't happening lately, so someone is selling lots of Treasuries to spoil the flight-to-safety phenomenon. Moreover, some flight-to-safety has been into German and Japanese bonds.
Trade is one very big reason.
The US, for many years, exported US inflation by buying cheaper imports from around the world.
These countries, in turn, brought US Treasuries to absorb those purchases and control inflation in their respective economies.
UST are a shock absorber for dealing with inflation and a benefit to both parties.
Selling Treasuries comes with it's own set of risks by the countries that hold them, but potentially a bigger risk when they sell them as it can be inflationary for their economies.
Think Chess verse checkers.
OPEC is source of petrodollars.
When US-China relations were good, the former Treasury Secretary Rubin made several trips to China to convince it to buy US Treasuries. Rumors were that US TIPS were launched in late 1990s to address China's concerns about US inflation - other countries had TIPS for decades. Of course, now is different, & China is no longer #1 holder of Treasuries, & may soon be #3 (from current #2).