The dons of finance, hitherto loyal keepers of Uncle Sam’s IOUs, have taken a most theatrical fright and are now
around $11 billion the lighter, according to the indomitable Financial Times. In only three months—once described by fund managers as “nothing personal, just global concern”—the flight from US Treasuries and corporate debt has undone the good work (or at least the steady plodding) of five years’ worth of net inflows. It’s reminiscent of a season in Biarritz, only with worse cocktails.
The exodus harks back to the glory days of Q1 2020, when everything was being sold except perhaps one’s own grandmother. Robert Tipp, high priest of bond wisdom at PGIM, offered this ominous gospel: “It’s a volatile environment, with inflation misbehaving and the government churning out IOUs as only a government can. People are nervous at the long end of the yield curve, though they do appreciate the coffee at Fed meetings.”
Amidst this financial hullabaloo, President Trump’s latest “big beautiful” spending extravaganza has raised the debt ceiling by a mere $5 trillion, unlocked bottomless barrels for defence and border festivities, slashed social programs (“take that, SNAP!”), and ushered in the kind of tax exemptions that would make even a country club treasurer blush. Clean energy credits, however, are left to shiver in their Birkenstocks, abandoned.
Official optimism, naturally, abounds. The Congressional Budget Office, armed with its trademark grimness, has peered into the abyss and found an extra $3.5 trillion deficit crouching at the bottom, waiting to startle the next administration. Treasury Secretary Scott Bessent, undeterred by trivial mathematics, reassures all that economic glory lies ahead: new jobs, thriving smokestacks, surging tax revenue, and all the manufacturing to make 1950s America blush. Presumably even Detroit might get a second cup of coffee.
In sum, Wall Street is sprinting for the exits, the government is shopping till it drops, and everyone’s hoping inflation will get bored and go home. Business as usual, then—at least for those who don’t read the footnotes.
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2025-07-05 17:41