As a reminder, it was the bond market that got Trump to blink with his tariffs pause. And after two weeks of going through the mess, we're in no better position to where we were back then. This was the situation when 30-year yields were at 4.90% on 10 April:
And yet, Treasury yields are still surging as the market continues to kick and scream. So, what next?
Considering their response to all this, you wouldn't want to bet on China to be the first to give in. That leaves only a battle between Trump and the Fed.
At this point in time, it's not an easy call. If Powell & co. do step in with emergency purchases of Treasuries, it will provide some short-term relief. However, the message that it sends is that it just enables Trump to stay on his tariffs crusade for longer. As for Trump backing down further, that's probably the best case scenario for markets - especially if he picks up the phone to call up Beijing."
This article was written by Justin Low at www.forexlive.com. Read More Details
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