Jim Bianco joins CNBC to explain what’s going on in the Bond Market (youtube.com)
Bond market reacting to inflation.
No one controls the bond market, not the Fed, not the Treasury. You have to enact policies that the bond market will like. Policies that bring down inflation, provide non-govenrment growth, and make dollar more of a safe haven.
It's possible CCP is manipulating their currency to keep Yuan from freefall. China owns hundreds of billions of US treasuries.
Most bond selling is from outside US trading hours.
Government might have to recalibrate how it sells debt. Bessent wants to do more in longterm, he said, but if the price of longterm borrowing keeps going up, he might have to borrow more shortterm than he would like.
At this point, if there was an economic crisis, could the government even bail out the banks (or whoever was Too Big To)? Everyone has for a decade assumed that would be the result of every cash shortage anywhere, but if the government is at the point where any further debt would potentially cause it to have a borrowing crisis, it might not be able to. In other words, as I wrote about years ago, the government (socialism) is the same as the banks now, and if there's a crisis, it is an unsolveable crisis because there is no separate entity the government. It would be a different kind of historic event (not just economic).
Policy being stable, the economic environment being stable has declined, the idea of being able to work things out has declined. Dalio. ‘Trust is the most important thing in all the capital markets. That's a source of great concern. It takes a very long time to build a reputation that the capital markets are free, safe, there's reasonableness and a way of working things out collectively that's not damaging. ... It only takes one time to lose that reputation. It takes a long time to get it back.' Negotiations and beyond negotiations, less volatility, just the idea that the capital markets won't lock up.
The world now needs China to be a consumer (not just a producer). Dalio. Then you would have increased monetary and fiscal policies to raies demand, particularly consumption, becaues exports, manufacturing are going to go down. If China raises consumption and US becomes less consumptive...
There are times when there is a question if bonds are an effective storehold of wealth (ie money), because of supplydemand. Then the need for what the Central Bank does, pushing down rates, providing liquidity. What is a good storehold of wealth?
The real VIX is gold. How high is high, I don't know. People are in buy and hold strategy, just like they used to be with stocks. That changes how they trade. Gold's down $100 (it's currently $3200), no one cares, they're not selling. It's being held by banks and things.