The upheaval in stocks has been grabbing all the headlines, but there is a bigger problem looming in another corner of the financial markets that rarely gets headlines: Investors are dumping U.S. government bonds.

Normally, investors rush into Treasurys at a whiff of economic chaos but now they are selling them as not even the lure of higher interest payments on the bonds is getting them to buy. The freak development has experts worried that big banks, funds and traders are losing faith in America as a good place to store their money.

“The fear is the U.S. is losing its standing as the safe haven,” said George Cipolloni, a fund manager at Penn Mutual Asset Management. “Our bond market is the biggest and most stable in the world, but when you add instability, bad things can happen.”

That could be bad news for consumers in need of a loan — and for President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets.

  • TronBronson@lemmy.world
    2·
    11 hours ago

    There are two different kinds of bonds, you described the couponless bonds, but most bonds pay a coupon. We are responsible for paying interest on those bonds bi-yearly. It’s an important part of the trade dynamic because the bonds can be traded for USD and produce USD for the older. If there is no international trade there’s no reason for them to hold our bonds.

    So just to help your example most people are looking for the cashflow. They give the US $1,000 and they want the $40 a year. They can then use the 40$ a year to exchange for goods and services without having to shuffle around much money. Since banks, countries and industrys are tied to this income the threat of default is truly a global wrecking ball.

    • sp3ctr4l@lemmy.dbzer0.comEnglish
      1·
      11 hours ago

      Ah, ok, I appreciate the correction!

      Doing my best trying to remember my course work from almost two decades ago, looks like I missed an important detail.

      … and that detail makes the situation… even worse, wonderful.

      • TronBronson@lemmy.world
        2·
        10 hours ago

        You we’re pretty much right on the money. I think the Zero Coupon bonds are more of a hedgefund favorites. Your average investor is going to be holding the couponed version in their 401k.

          • TronBronson@lemmy.world
            2·
            7 hours ago

            Yeah, that’s why I called my senator because this isn’t really the same as Nancy Pelosi making her self rich on Google calls. This is robbing every single investor in the world. Stealing straight out of grandma’s retirement account.