To borrow an old joke from President Donald Trump’s first term: Welcome to the resistance, bond traders.
The financial professionals who buy and sell U.S. Treasury bonds for major investors on the secondary market helped force the president to back down from imposing a disastrous set of tariffs on almost every country in the world.
It was a refreshing reminder that checks and balances can still work, even if they aren’t the ones described in your civics class.
Trump confirmed Wednesday that bond traders were at least partially behind the reversal, telling reporters that he had been watching the bond market and saw that investors were “getting a little queasy.” Wall Street also gave them credit. “The Bond Vigilantes have struck again,” market researcher Ed Yardeni wrote. A reporter for the Financial Times even offered an apology for having doubted the bond traders earlier.
To be clear, bond traders aren’t some shadowy cabal trying to take down the Trump presidency. They’re just a bunch of quants responding to market conditions as they try to figure out how to make their clients slightly richer that day. But at a time when so many other institutional actors — from white-shoe lawyers to university presidents — are failing at their jobs, it was nice to see.
A key check on Trump’s financially illiterate plan to roll back 20th century economics turned out to be the simple 10-year Treasury bond.
As it turned out, a key check on Trump’s financially illiterate plan to roll back 20th century economics turned out to be the simple 10-year Treasury bond.
The federal government issues these bonds four times a year, with interest rates set by how much buyers are willing to bid at an auction. That rate is an important benchmark that affects how much you pay each month on everything from your credit card bill to your car loan to your mortgage.
That’s why it was so important when bond traders started, in Trump’s words, “getting a bit yippy.”