Stock market

[neurosis]

the price climbed considerably in the last 4 years, along with everything else.

I just remember reports saying that there was a negative impact on soybeans.

This is a report from 2018. 

I don't follow agriculture so I have no idea. 


https://www.axios.com/2018/11/05/us-soybean-china-94-percent-trump-trade-war

[Dan_AKA_ROY23]

Then again, I have no idea what his game plan is. All I can do is guess.  

Like everyone else. Hence, stocks are getting slammed.

[pmartin]

Todays Republicans want exactly that. Party uber alles.

If things keep going the way they are lately it will be party Uber drivers.

[mkd]

That's really great analysis and strategies, Dan.
 The market is moving on the slightest glimmer of policy change.
 Gonna feel pretty foolish selling everything if the tariff policy turns out to just be temporary leverage.
.
.
 I'm not seeing any relief in sight this week.

One of my larger buy orders missed by smidge this morning. Would have been nice to average down on that holding had I known just how temporary the game was

[CNCAppsJames]

Bucky, Come to the dark side! 😝

We have cookies...

[Elmer Fudd]

S&P up 9.5%. Crazy I tell ya.

[Smit]

This is an interesting read.

The bond market selloff badly rattled investors. Here's what analysts are saying about this key market and what's to come

A plunging stock market may make it painful to check your 401(k), but as investors found out this week it was when bonds started plunging (and yields, which move inversely to bond prices, starting spiking) that things got really bad. So bad, in fact, that Trump hit his pain threshold and announced a 90-day pause on most tariffs. Why are bond yields, of all things, so important? For retail investors, it's likely something they haven't paid much attention to in the past. But the 10-year Treasury yield is a benchmark that directly influences borrowing costs for all U.S. consumers, and when it heads in the wrong direction, that has major implications for the U.S. economy.

What are bonds?

Bonds are loans where an investor lends money to an entity, usually a corporation, government or organization. Borrowers typically pay a fixed interest rate over a period of time. Bonds are considered fixed income financial instruments and are geared to investors who want stable returns.
Why are 10-year and 30-year Treasury notes popular bonds?

The safest of all bonds are U.S. Treasuries because they are backed by the U.S. government. The 10-year and 30-year Treasury notes are some of the more popular bonds, providing fixed-income payments every six months and guaranteeing a return of principal if investors hold the bond until maturity. The 10-year Treasury is the most liquid and widely traded bond in the world. U.S. Treasuries are a very large component of the U.S. bond market, but don't represent the entire U.S. bond market.

Why did investors get spooked and begin offloading bonds?

On April 2, President Trump introduced his "Liberation Day" tariffs which imposed taxes on nearly all products that are imported from other countries. The tariffs are expected to cause inflation to rise over the short term. They also caused a huge selloff in the broad market, with the value of U.S. listed stocks plunging by $7.7 trillion in value since April 2, according to the Wall Street Journal. Usually when a stock selloff occurs, investors buy bonds, especially U.S. Treasuries, because they're considered safer. But that didn't happen this time. Investors began unloading bonds late last week. That caused the yield for the 10-year Treasury to climb above 4% on Tuesday and then it jumped to 4.5% early Wednesday. Then Trump announced a 90-day pause on some tariffs, causing the S&P 500 to soar 9.5% and the Nasdaq Composite to skyrocket more than 12%. The bond market found some relief at that point, with the yield dropping to 4.34% on the 10-year by Wednesday afternoon. The dramatic moves had even seasoned investors whipsawed. "I am a bit surprised at both the speed and magnitude of the moves in the bond market," noted Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth.
Why is the bond selloff important?

Basically, when investors sell 10-year Treasury notes, bond prices fall, and the yield rises. When Treasury bond yields climb, so do all other interest rates. The 10-year Treasury weighs heavily on what consumers are charged for mortgages, auto loans, and credit cards, said Tom Simons, chief U.S. economist at Jefferies.

High net worth investors and hedge funds will likely lose a lot of money, Simons said. But for consumers, interest rates will probably stay high because "lenders won't have confidence that Treasuries will stay at lower yields over time," he said.
Who owns Treasuries?

Ownership of Treasuries is spread out all over the world and include sovereign wealth funds, foreign central banks, pension funds, domestic banks, insurance companies, and hedge funds. Japan, China and the U.K. are said to be the largest holders of Treasuries.
Could the bond selloff get worse?

Absolutely. On Thursday, the U.S. Bureau of Labor Statistics is expected to release its monthly Consumer Price Index, or CPI, which tracks price changes in goods and services commonly bought by households. If the CPI shows that inflation in March was higher than expected, that will put further upward pressure on bond yields, likely causing bond prices to come down even further, Pappalardo said. "It would push interest rates higher without a doubt if that were to occur," he said.

The current 10-year Treasury yield is 4.34 but it has gone much higher. In 1981, when inflation was high, the yield hit 15.84%.
Has a selloff of both bonds and stocks happened before?

Yes. The most recent example is in 2022, when the yield for the 10-year Treasury hit about 3.9% that December, up from around 1.5% at the start of the year. The S&P 500 and the Nasdaq Composite also performed poorly that year.
What can the Federal Reserve do?

In 2022, high inflation spurred the Federal Reserve to step in and raise interest rates seven times that year. This slowed economic activity and "helped cool down inflation," said Morningstar's Pappalardo. It's unclear if the Fed will take action this time. If the Fed rushed out and hiked interest rates to cool inflation, it would "trigger a massive economic downturn," he said. But if they lowered interest rates to support economic activity, they risk causing inflation to increase even faster. "The Fed is really caught in a conundrum where they're almost a bit paralyzed," Pappalardo said. The futures markets are predicting a 40% chance that the Fed cuts rates at its next meeting in May, he said. But given how quickly market conditions are changing, that timeframe seems a world away.

[beej]

This is an interesting read.

The bond market selloff badly rattled investors. Here's what analysts are saying about this key market and what's to come

Interesting. if this is really the reason why he paused the tariffs rather than the stated reason, it lends credence to the idea that, what this is really all about, is refinancing the federal debt that is due this year.

[SuperHoneyBadger]

what this is really all about, is refinancing the federal debt that is due this year.

I still am unable to really grasp this concept, refinancing debt by issuing more debt. I have done a lot of reading and listening to try and understand, but the explanations seem to be self-cyclical, ouroborosian even. Also makes as much sense at the ground level as fractional reserve banking, so it's hard to go in trying to understand something when my viewpoint at the beginning is coloured so negatively.

Anyone got a primer from a 101 course, or a really good explanation?

[beej]

I still am unable to really grasp this concept, refinancing debt by issuing more debt. I have done a lot of reading and listening to try and understand, but the explanations seem to be self-cyclical, ouroborosian even. Also makes as much sense at the ground level as fractional reserve banking, so it's hard to go in trying to understand something when my viewpoint at the beginning is coloured so negatively.

Anyone got a primer from a 101 course, or a really good explanation?

The public buys bonds that have a maturation date. the government has to pay them on the maturation date. In order to pay them they have to issue new bonds and convince the public to buy them. they do so by agreeing to pay a certain interest rate. And those interest rates are based on the several factors including the federal reserve rate.

[gcode]

Cliff Notes

The US government is making payments on their credit cards using new credit cards.
The theory is that Trump is doing all the tariff stuff to ratchet down the Prime Rate.
Then the new credit cards will have a lower interest rate than the old credit cards.

The numbers involved are massive, (beyond comprehension)
So massive that even a half point lower rate on 10 year Treasury bonds yields trillions in savings.

[SuperHoneyBadger]

The US government is making payments on their credit cards using new credit cards.
The theory is that Trump is doing all the tariff stuff to ratchet down the Prime Rate.
Then the new credit cards will have a lower interest rate than the old credit cards.

The numbers involved are massive, (beyond comprehension)
So massive that even a half point lower rate on 10 year Treasury bonds yields trillions in savings.

Thanks, I follow.

So then when this debt matures, just do it again? Or the hope is that staving off the wolves allows growth/progress that can start to cover some of the debt? It seems like the idea is never to try and pay it.

[Newbeeee™]

Anyone got a primer from a 101 course, or a really good explanation?

You are wise beyond your years.
Bottom line it will cost us more.
Fractional reserve banking - aka Ponzi schemes - only ever cost "us" money.
"They" make money.

[Newbeeee™]

aaaannnndddd oh, look....
https://x.com/MorePerfectUS/status/1910340290260463771

[gcode]

Or the hope is that staving off the wolves allows growth/progress that can start to cover some of the debt?

I believe that is Trump's goal, but 4 years is not nearly enough time to significantly pay the debt down.
It would take a massive increase in revenue and a massive decrease in spending.
In today's political climate that is simply not possible.

Our annual debt payment currently exceeds our annual spending on defense... and we are not paying the debt down.
It continues to grow.