Trump and US Bonds

The U.S. bond market’s going crazy because big investors are dumping bonds, fearing inflation and heavy government borrowing. Yields have jumped to the highest in decades. That’s a big deal because it makes borrowing more expensive for everyone and could cool down the whole economy.

4/11/20251 min read

What’s going on in the U.S. bond market right now?

1. Bond Yields Are Spiking

Bond prices are falling → which means yields (interest rates) are rising.
Recently, 30-year U.S. Treasury yields shot up to 4.9%, a sharp jump not seen since 1982.

2. Why is this happening?

Strong economy = higher inflation risks = investors demand higher returns (yields) to hold bonds.
The U.S. government is borrowing more, flooding the market with bonds.
Hedge funds were playing a risky strategy called the "basis trade" (borrow cheap, invest in bonds) — but now that’s backfiring and they're selling bonds fast.
That sudden selling pushes bond prices down, and yields up even more.

3. Why does this matter so much?

Higher bond yields = higher borrowing costs:
- For people: mortgages, car loans, credit cards
- For businesses: loans become costlier
Stock markets get nervous: Higher yields compete with stocks for investor money.
Government has to pay more interest on its debt = more fiscal pressure

Do you want to understand more topics in simple way?

Subscribe to our newsletter