Courtesy: @NYSE on X
PITTSBURGH, PA (PTTP) – U.S. treasury bonds are being sold at an unprecedented
rate, shaking up the traditional flow of the U.S. market. The yield of a bond climbs as
they are sold, and the rate jumped from 3.9% to 4.5% within just two days.
Several of the recent changes in the market have been attributed to President Trump’s
recently announced tariffs of foreign imports, which happened on April 2nd. Several
different countries were each given a different rate, with China receiving the largest.
Bonds are typically seen as being a safer asset compared to stocks. Their price
fluctuates less than stocks, and usually preserve most of their wealth. Bonds normally
give stable returns, making them better investments for those not wanting to take a risk.
While bonds are usually bought during times of international uncertainty, the opposite is
currently happening. Stocks are falling while bonds are being sold, defying the market
norms.
A massive investor in U.S. treasuries are foreign, with China holding 760 billion in
securities. Such a large exodus in our market could be indicative of a shrinking
confidence in the U.S. market.
For average citizens that do not have large investments in bonds, the biggest effect they
will feel is towards 401ks. While bonds don’t play as large of a factor in daily life for
most as the stock market, this exodus is reflective of the current beliefs of the country.