Debt Rattle April 7 2025

[WES]

DBS:

Private investors still don’t want to buy US bonds!

Notice Trump is trying to force other governments to buy US bonds!

Private companies are being invited to invest in the US to avoid the tariffs.

Notice China doesn’t want to buy more US debt!
They have been steadily reducing US bonds and buying gold instead.
They want to own enough gold to offset any US bond losses.
China doesn’t want to step right back into that same trap!

Trump is inviting China to finance the US gov by buy more US bonds!
Please step right back into our trap!

Obviously, China doesn’t want to use their hard earned surpluses to finance the US, again!
China would rather spend their surplus to benefit their own country not the US.
So expect China to negotiate the longest and hardest with Trump.
They do have a financial cushion few other countries have.

But Trump must get China back buying US bonds to be fully successful in lowering US interest rates below 3%.
If China still refuses, then Trump could be in a world of hurt , as other countries might follow suit.

[aspnaz]

@WES Indeed, the USG has been pushing zero-coupon, 100 year bonds, on foreign governments, trying to force them to basically pay the US debt. Of course, nobody wants to take them, USG debt buyers want shorter and shorter durations as uncertainty grows. Who knows if the USA will even exist in 100 years, let alone whether they will care about paying 100 year old bonds, and given the uncertainty, 100 years seems like a piss take, but some will buy simply to avoid tariff, but they will be saying goodbye to their money, and they know it. Given the USG is agreement incapable, 100 years is a joke.

[aspnaz]

If they can get enough foreign governments to take the zero coupon bonds, then they do not need to care about the interest rate as their debt repayments will be deferred for 100 years. The tariff pressure is all part of this game, borrowing from the future in order to save on pain today. It is a nice idea, will only work on very small and weak countries, China won’t be doing it unless the USA pays such a huge price today that makes it worth their while, and that is unlikely politically.

[Author]

Posts