Foreigners Are Fleeing From Treasury Bonds, But It’s Probably Not Trump’s Fault

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Bloomberg reports that foreigners are tripping over themselves to unload their holdings of US treasuries:

In the age of Trump, America’s biggest foreign creditors are suddenly having second thoughts about financing the U.S. government.

….From Tokyo to Beijing and London, the consensus is clear: few overseas investors want to step into the $13.9 trillion U.S. Treasury market right now. Whether it’s the prospect of bigger deficits and more inflation under President Donald Trump or higher interest rates from the Federal Reserve, the world’s safest debt market seems less of a sure thing — particularly after the upswing in yields since November. And then there is Trump’s penchant for saber rattling, which has made staying home that much easier.

….Combined with the unpredictability of Trump’s tweet storms, interest-rate increases in the U.S. could further sap overseas demand….Right now, it’s just “much easier to stay home than go abroad,” said Shyam Rajan, Bank of America’s head of U.S. rates strategy.

Hmmm. The age of Trump? According to the Treasury Department, the selloff started in June:

Preliminary figures from Japan suggest that December will be much the same as November, which means foreigners will have sold off nearly a half-trillion dollars worth of treasuries in six months. That’s 7 percent of their total holdings. The only other time there’s been a selloff this sustained was at the tail end of the dotcom boom.

But is it Trump’s fault? Nobody thought he had a chance of winning until November, so it’s hard to see how he could have caused uneasiness with federal debt back in June. I don’t imagine Trump has done the US debt market any favors, but on this score, at least, I suspect he’s getting more blame than he deserves.

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As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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