The current rise in yields on government bonds, particularly in the USA, has developed into a significant economic phenomenon. This development is so significant that it even influences prominent figures such as Donald Trump.
Background and Causes
Increase in Yields: The yields for ten-year US government bonds have risen by over 40 basis points in a short period, marking the strongest weekly increase since the financial crisis of 2008. For 30-year bonds, the increase was even more pronounced and has not been seen since the early 1980s.
Trade Policy and Tariffs: A key factor driving this development is the aggressive trade policy of the USA, particularly the tariffs introduced by Donald Trump. These measures have escalated the trade conflict with China, which in turn has increased market uncertainty.
China as a Political Factor: China holds over $800 billion in US debt and could use this as a political leverage, further complicating the situation.
Market Impacts
Uncertainty and Panic Selling: Instead of fleeing to government bonds, as would be typical in crisis times, investors are selling both stocks and bonds. This leads to increased volatility and uncertainty in the market.
Carry Trade and Institutional Investors: A carry trade involving hundreds of billions of dollars is also in play. Large institutional investors have begun fleeing from the public sector to the private sector, affecting the demand for government bonds.
Recession Risk: US trade policy has heightened the recession risk, leading to an increase in government bond yields. Experts estimate the risk of a recession at 60%.
Relevance for Private Investors and Savers
Investment Strategies: The rising yields on government bonds may be attractive to private investors, as they offer higher returns. However, the risk also increases as market volatility rises.
Security and Confidence: Government bonds have traditionally been considered a safe investment form, but the current situation has shaken confidence in these investments. Private investors must adjust their investment strategies to the changed market conditions.
Long-term Effects: The current market development could have long-term implications for the global economy, especially if trade conflicts and political tensions persist. Private investors should prepare for possible changes in economic policy and their effects on investment forms.