Donald Trump finally decided to take the proverbial “victory” on trade and the stock market rallied nearly 3,000 points.
You can thank the bond market, with a decisive pass from the secretary of the Treasury Scott Bessent, for having done so.
We have been hyper-concentrated on how the stock market has dropped since Trump declared the trade war worldwide, how he continued to increase the bet, demanding ever higher remuneration degrees of our business partners, even those who seemed to act in good faith and want to negotiate peace.
Trump’s commercial intransigence was a reflection of his own desire often stated to level the rules of the game, ending our perpetually important commercial deficits with the world.
The mentality of his state of mind “Art-of-The-the-the-the-the-the-Deal was also a maximum lever attempt in negotiations.
It was also sharpened by two of the most Bellician and protectionist advisers to have ever set foot in the White House: Howard Lungick, Commerce Secretary, and Peter Navarro, who holds the president’s main advice title.
Scott Bessent, a veteran of Wall Street, who looked for common ground, made agreements with countries, but who did not engage in war.
The Hawks seemed firmly in control even if the markets around the world continued to crater, the American stock market indices losing billions of dollars of value.
Trump continued to ignore the EU olive branches, which publicly declared that he wanted no tariff with the United States on many goods; Trump even continued to play with Israel, one of our closest allies, after Prime Minister Benjamin Netanyahu told him that he would eliminate all prices on American goods, would eliminate the trade deficit with the United States.
This long match ended Tuesday evening in the form of a bond market rout for ages.
Main street can withstand certain stock market declines.
But the United States has 36 billions of dollars of bonds in circulation, a large part in foreign hands, which we use to finance public operations.
The bond market is also the plumbing of the economy because it also sets interest rates on loans to consumers and businesses.
If the United States cannot sell its debt, it cannot pay for things like Social Security, the military or connect our huge deficit.
In other words, when bond prices drop and their interest rates increase, this could mean an economic disaster.
This is what the bond market reported on Tuesday evening, a real panic like the return on the 10 -year obligation drew at 4.51%; The yield on the 30 -year obligation exceeded 5%.
Someone discussed mass obligations in the middle of the commercial turmoil.
A recent auction of the Treasury did not go so well, adding to upheavals.
Market experts have speculated that hedge funds have relaxed certain complex trades.
Worse still, the CEO told me a great financial institution that one of our greatest foreign treasure bill holders, the Japanese, relaxed American debt in large quantities.
Many fingers have pointed out China, our long -term opponent economically and militarily, but it was a friendly country, selling in enormous quantities and sending interest rates in a dangerous territory.
This type of instability has clearly made an impression on Bessent, I am told.
What happened then is one for history books.
It was Bessent, not Lutnick or Navarro, who held a press conference on Wednesday saying that our trade war with the world – with the exception of a hyper belligerent China – was finished, or at least in break.
He attributed it to Trump’s negotiation style, playing the long game and bringing people to the table to discuss the drop in trade barriers.
It is a victory that Wall Street is delighted that Trump took.
