When governments spend beyond their means, they sell bonds to finance their debt. It allows countries to kick the can of balanced budgets down the road, until they hit a dead end. Now a major sell-off on global bond markets is pushing borrowing costs higher and forcing some hard choices. Is bond market warning governments that the era of cheap money is coming to an end? What will be the impact on the global economy?
DW speaks to Carsten Brzeski, Global Head at Macro Research and Chief Economist at ING Germany, on US economic interventions
Chapter Breakdown
0:00 Why yields go up when bond prices go down
0:36 James Carville, strategist for establishment Democratic candidates, former Bill Clinton campaign strategist, on why the bond market is so consequential
0:52 US Treasury Secretary Scott Bessent announces bond buyback scheme
1:14 US President Trump on whether he directed Bessent to do the intervention
1:56 Markets react to US debt (40 trillion USD) and the war in Iran, with 10-year US Treasury yields approaching 5% and Japanese, German, and UK borrowing costs also increasing
2:22 Carsten Brzeski, former employee at the Dutch Finance Ministry and European Commission, on Trump’s comments impyling the US military can solve economic issues
3:07 How does American military power and dollar dominance go hand in hand?
3:56 Brzeski argues that US dollar hegemony is not (yet) over
5:31 Why the war in Iran has pushed up energy prices and rates
6:05 Bessent’s unusual bond intervention: why Treasuries typically do not intervene in capital markets
7:12 Interventions such as Bessent’s only work if accompanied by fiscal policy changes
7:20 Can markets ignore worsening public deficits?
7:46 Markets “repricing” their inflation expectations, given their realization that the US is in a “forever” war in Iran
9:09 “End of the welfare state” with rising spending on defence in Germany
#dwcurrentaffairs #bondmarket #scottbessent
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Declining power in full meltdown under a felon president!
"The UK could end quantitative tightening (QT), reduce interest rates, stop unnecessary bond issuance, abandon the full-funding rule (use Ways and Means overdraft account at the BoE) , reform interest payments to commercial banks (CBRA accounts), discourage financial speculation through (Spahn) taxation and increase taxes on those benefiting from higher interest rates (Taxing Wealth Report 2024).
These are political choices."
See How to beat the bond markets at Tax Research / Funding the Future blog.
Trump is nothing more than ANOTHER bloated Pentagon Pawn.
9:25 – well, how about taxing the rich? They could give more…
Hey grow food, it’s not taxed yet!
US military regime would force allies to buy worthless bonds at gunpoint????
These guys always dance around the debt and deficit problem as though it is some incomprehensible, mysterious alien monster, and then ultimately conclude that the the only solution is austerity policies born on the backs of ordinary people. However, they all know the real culprits responsible for deficits and the debt buildup, and they know the answers to solve it, but are loathe even to name them.
The two primary sources of the deficit and debt problem are the same sources of its solution: excessive military and destructive warfare spending and activity to protect and extend the interests of wealthy individuals and corporations both locally and globally; and most importantly, under taxation of wealth and the hyperbolic concentration under taxation has produced over the duration of nearly half a century. The deficit and debt problem is not the result of domestic spending on social programs, which is the common misbelief and narrative with which people have been brainwashed into accepting as truth.
These guys will never do what it takes to address this mess if it means they must make any sacrifices or forfeit a single, duly-owed coin of their hoarded bounty. Instead, they would rather see it all burn to the ground for everyone else. That is the real plan of record.
China makes goods America makes fraud
Luckily I live in a country (Sweden) with about 18% of BNP as our National debt despite having a generous welfare state and large investments in defence…. it can be done. And Sweden doesnt have oil.
This scaremongering could quite possibly be wrong. Government bonds, at least for developed economies with currency sovereignty (i.e. not euro area) usually price future growth prospects and inflation prospects. The longer dated bonds, longer than 10 years, price in mostly growth prospects and not much of inflation prospects. Because the stock markets around the world are not in down trends, government bond yields are probably not rising due to future risks,.
Russia will bankrupt..????????
This is what they used to say. You remember that?
Stock market is among the top most scams ever developed by humans. Nothing but sucking money from the hardworking man and relying on inflation and making things expensive for the future generations to reap benefits for the investors.
mercenary markets
Global economic collapse is here!!!!! great reset is here!!! one world government/one world currency is here!!!! end times are here!!!!
There's a "global sell-off of U.S. debt"? Is he sure he wants to use that language?
Bond!!! Shaken and stirred
Meanwhile stock market is a ostrich with its head in the sand.
because war nowadays is not like the past colonization and war spoil
America debt no value, you can't buy anything
Short term interest rates will rise if he intervenes. It’s a zero sum game, do they not know.
The whole world is a ponzi sceme.
The USA has long been overdue for a depression. How can you sustain a country where half of the jobs are make believe jobs?
The bond market has oil do your thing usa !
Can't all the governments agree to erase each others debt?
Warmongers are spending too much money on their hobbies, thus the debts