The Bond Market Just Forced Trump to Blink First Editor's Note: Imagine knowing exactly how big of a return you can expect to make on an investment before you invest a single dollar. In this kind of market, that kind of safety and stability could be a complete game changer! Fortunately, that's the opportunity that's in front of you right now... but our friend and income expert at The Oxford Club Marc Lichtenfeld recommends acting before the next market swing. Learn more about the situation here. - Amanda Heckman, Publisher
 | | Robert Ross
Speculative Assets Specialist | "If I could come back as anything, I'd come back as the bond market. You can intimidate everyone." After last week, that line from longtime political strategist James Carville couldn't feel more relevant. It wasn't the stock market meltdown that pushed President Trump to backtrack on his sweeping "Liberation Day" tariff agenda... It was the U.S. government bond market. The Historic Slide Has Stalled Last week, the S&P 500 nearly had its worst three-day stretch in history. We're talking worse than the COVID crash... The 2008 financial crisis... Even 1987's Black Monday. At the depths of the most recent sell-off, $8 trillion in equity market value had been wiped out. Yet, the Trump administration held firm. They doubled down on tariffs, shrugged off investor panic, and openly welcomed lower asset prices under the guise of "economic detox." Their stated goal was to slow the economy, reduce inflation, and lower long-term yields so the U.S. government could refinance its debt at cheaper levels. I clocked this strategy in mid-March, well before the Trump administration confirmed it months later. But on Tuesday night, that plan began to unravel. Bond markets around the world started buckling. The 10-year Treasury yield surged - its largest four-day rise since March 2020. The 30-year Treasury yield saw its biggest weekly spike since 1982. That's not normal. And it's not good. 
View larger image U.S. government debt isn't just a number on a spreadsheet... it's the cornerstone of our entire financial system. It's how we fund everything from defense to Social Security. And it's widely held by our largest trading partners: China, Japan, and Europe. But with tariffs suddenly targeting those very partners, something snapped. Foreign buyers began selling U.S. bonds. Yields soared. That's a problem for a few reasons. The Bond Market Rules Everything Around Me Bond yields move inversely to bond prices. So, when investors sell Treasurys, prices fall, and yields rise. That pushes up interest rates across the board, from mortgages to business loans to government debt. Higher yields don't just slow growth. They raise borrowing costs for a country already carrying $36 trillion in debt. When you're trying to lower borrowing costs, triggering a bond sell-off is a surefire way to do the opposite. 
View larger image That's why this past week's spike in yields was so dangerous. It meant the very thing the administration was trying to avoid - a debt spiral - was now in play. It also meant the bond market had lost confidence in U.S. leadership. That's a red line. The reaction? Trump abruptly reversed course on Wednesday. After insisting just a day earlier that tariffs would remain in place, he walked back the plan. Most tariffs were suspended for 90 days, with only China facing the full brunt of the 125% rate. And the baseline 10% tariffs for nearly all countries remained in effect. Now to be clear, the damage isn't fully undone. Bond yields are still elevated. The U.S. dollar has started falling, which is rare when yields are rising. That divergence signals something deeper: foreign capital isn't rotating into other U.S. assets - it's leaving the system altogether. 
View larger image That's a flashing red light. It suggests global investors aren't just hedging volatility - they're questioning whether the U.S. is still a reliable economic partner. There are some possible off-ramps from here. - A potential U.S.-China trade deal.
- A full repeal of the tariffs.
- The Fed stepping in to cut interest rates.
In fact, JPMorgan CEO Jamie Dimon said Friday that the Fed should cut rates if trade tensions persist. That may be why the S&P 500 staged one of its biggest rallies ever to close the week. But there is some good news. The Trump Put is Back President Trump and his team had said for weeks they weren't watching, nor did they care, that stocks were crashing. But now we know that was a lie, as it seems a 20% drop in the S&P 500 and a spike in bond yields is the line in the sand. That doesn't mean volatility is over. It just means we know the boundaries a little better now. But my view that this market crash is more akin to 2018 as opposed to 2001 or 2008 remains intact: 
View larger image And in this kind of market, that's valuable information. It allows us to be tactical, patient and opportunistic. That's why I've started putting cash back to work. Not all at once - but methodically. Because when panic subsides, opportunity rises. With the VIX over 50 last week, levels not seen since the COVID crash, I knew that forward returns are 3x what they are in normal periods. 
View larger image It doesn't mean the bottom is in. But it does mean we're entering a window where smart, calculated moves can pay off big down the line. Stay nimble. Stay focused. And remember, when the bond market speaks, it pays to listen. Robert P.S. My friend Marc Lichtenfeld has been listening. And he recently released a presentation on a special kind of bond he calls a 'superbond.' He bets less than 1% of investors own superbonds... but his favorite superbond right now is offering a 200% contractually obligated return within four years. Watch his video to get the details. Want more content like this? | | | | | | 
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