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Trump administration 2024-2028

Czech_pivo said:
In addition, this is a bit concerning for US treasuries.

www.cnbc.com

World's biggest sovereign wealth fund plans to cut U.S. Treasury holdings

Norway's $2.3 trillion investment fund says it can diversify into new areas with greater risk and returns.
www.cnbc.com www.cnbc.com

World’s biggest sovereign wealth fund plans to cut U.S. Treasury holdings​


Norway’s mammoth wealth fund wants to cut its holdings of government bonds, chiefly affecting U.S. Treasurys, as it seeks greater returns elsewhere.

The proposed reallocation would gradually cut NBIM’s Treasury holdings from 34.1% to 21.9%, reduce its euro area holdings from 16.8% to 14.1%, and increase its share of Japanese government bonds to 7.4% from 4.6%.

This is not a 'small' reduction. It's over 1/3 of their Treasury holdings - a significant reduction for them. The selling off of these means they will need to find a 'willing' buyer for these bonds. Given the current global sell off of government bonds, is may in fact make the situation worse, dependent on how soon they want this reduction to occur.
The potential shift would come at a sensitive time for the Treasury market, with long-dated yields pushed to decade-highs as investors fret over the U.S. fiscal trajectory and increasingly heavy debt load.

“Reliable buyers and holders of U.S. Treasurys are under pressure,” economist Mohamed El-Erian told CNBC’s Carolin Roth in a Friday interview, citing Japan, China and Gulf countries.

This is what is spooking the Norwegians - a 'Black Swan' event. I'm happy to see that they are actively thinking along these lines - and publicly talking about it. Alot like the Swedes and the 'body bags' article that I posted in another thread.

A recent stress test by NBIM found that an AI correction could wipe $740 billion, or 35%, off its value.
Click to expand...

WSJ puts a dollar value on the US Treasuries that the Norwegians are looking to sell - 80$ billion USD - not a huge/large amount, but a significant amounts. What will be more interesting is to see if any other Sovereign Wealth Funds or major pension plan funds look at this declaration, and plan, by the Norwegians and conclude, "Maybe they know something that we don't know and we should follow their lead." If that $80B snowballs into $180B or $280B+, then that becomes a major issue for the US.


Norway’s Massive Oil Fund Proposes Selling Roughly $80 Billion in U.S. Treasurys​

Norges Bank Investment Management said the portion of its bond portfolio allocated to government debt should be cut to 50% from 70%​

 
Brad Sallows said:
Every seller needs a buyer. What do the buyers know/believe?
Click to expand...
“Reliable buyers and holders of U.S. Treasurys are under pressure,” economist Mohamed El-Erian told CNBC’s Carolin Roth in a Friday interview, citing Japan, China and Gulf countries.

www.cnbc.com

World's biggest sovereign wealth fund plans to cut U.S. Treasury holdings

Norway's $2.3 trillion investment fund says it can diversify into new areas with greater risk and returns.
www.cnbc.com www.cnbc.com

Addressing NBIM’s proposal to reduce its own share of Treasurys, El-Erian said, “The size isn’t big, but the signal that traditional holders and buyers are becoming less reliable is a very important one.”
www.cnbc.com

Global bond sell-off likely not over yet, Mohamed El-Erian tells CNBC

In a wide-ranging interview, the renowned economist also said the U.S. Treasury had taken "a step too far" with its market intervention.
www.cnbc.com www.cnbc.com
“China, for geopolitical purposes, is no longer as willing,” he said. “Japan and the Gulf countries have domestic issues.”

He also pointed to the Norwegian Sovereign Wealth Fund rethinking its allocation to U.S. government bonds.

“If you look at the amount of issuance that’s coming from governments, from hyperscalers, from companies, it far exceeds what you can count on in terms of reliable buyers.

“And that’s why there’s been pressure on interest rates. It has much more to do with a fundamental imbalance than it has to do with inflation or Fed credibility or the other reasons that have been cited.”

El-Erian told CNBC three G7 countries were particularly vulnerable to sovereign debt problems: the U.K., Japan and France.

“Those by numbers, by everything else, and the U.K. in particular is what I call a high-beta country,” he said. “That every time rates move by a bit in the U.S., they move by a lot more in the U.K.”

“In the old days you would worry about Italy. Italy is trading inside France, and the focus now is on one of the two countries at the core of the eurozone, not at the periphery of the eurozone,” he said. “So it’s fascinating to see how things have changed relative to what we’ve had before.”

Bottom line - there many not be enough 'reliable' buyers for US Treasuries going forward. The definition of 'reliable' in this scenario is someone who is a 'consistent, long term, long time buyer' - not someone who is looking to 'flip' these bonds once, twice, three times over a 1-7yr period for example.

For bonds, and price and yield move in oppositive directions. So to, if there are few buyers for long term US Treasuries, sellers will look to drop the price of the bond, thus driving up the yield of the bond in the hopes that it attracts enough buyers. The increasing of bond yields is what can destroy the housing (mortgage rates) market, cause your dollar to 'spike' in value (making your exports to expensive) and the cost of your government debt payments (interest rates) to rise higher - which in turn increases your overall debt, cuts existing government services, etc.
 
In addition -

www.cnbc.com

Global bond sell-off likely not over yet, Mohamed El-Erian tells CNBC

In a wide-ranging interview, the renowned economist also said the U.S. Treasury had taken "a step too far" with its market intervention.
www.cnbc.com www.cnbc.com

U.S. Treasury department’s ‘step too far’​

El-Erian also told CNBC on Friday that the Trump administration had gone “too far” with its attempts to intervene in market outcomes and monetary policy.

Last month, the U.S. Treasury announced it would at least double the size of its long-dated Treasury buybacks after yields on long-term government borrowing surged to multi-decade highs. On Thursday, U.S. Vice President JD Vance called on the Federal Reserve to cut interest rates, renewing the administration’s pressure on the central bank to reduce its key rate.

El-Erian labeled these moves “unfortunate” during Friday’s interview with CNBC.

“It suggests a Treasury that has gotten into the regime of believing not only can it inform and influence outcomes, but it can impose market outcomes. I think that’s a step too far,” he said. “And the question now is, how do you step back from this? I think the results are clear. It’s a massive market. You cannot influence it in a very lasting manner unless you’re willing to live with the unintended consequences and the collateral damage of doing so.

This is important to note because of the 'link' above under 'announced' - listed below.

Bessent says Treasury buyback operation could be more than $4 billion

www.cnbc.com

Bessent says Treasury buyback operation could be more than $4 billion

Bessent said his department is going "make a market" in the longer-dated securities where yields have been surging lately.
www.cnbc.com www.cnbc.com

Treasury Secretary Scott Bessent told CNBC on Thursday that an accelerated buyback of government debt could be higher than the announced $4 billion.

In a live interview, Bessent said his department is going “make a market” in the longer-dated securities where yields have been surging lately. Treasury announced Wednesday that it would be doubling its scheduled $2 billion in buybacks of longer-dated government debt, sending yields sharply lower.

“We’re going to increase the size of the buyback,” he said. “I would note that it could be more than the 4 billion per issue.”

Bessent last week was talking about a 4-5$ billion buyback of US long-term Treasuries - the Norwegians alone today announced that they are selling $80billion - that's a massive disconnect. Add into this scenario that other SWF's and large Pension Plan Funds will undoubtably follow the Norwegians lead and we have the makings of a sizeable problem for the Keystone Cops in the WH to deal with.
 
Glad I "took my profits" (turned my ROI of close to 40% into cash) from my market exposure last month, leaving the rest of it at play. Even tho I am now poised to strike once the markets tank, it is still all very worrying
 
PPCLI Guy said:
Glad I "took my profits" (turned my ROI of close to 40% into cash) from my market exposure last month, leaving the rest of it at play. Even tho I am now poised to strike once the markets tank, it is still all very worrying
Click to expand...
I'm sitting around 50% cash (could be a bit more, have not figured out the actual number) and I'm quietly waiting to see if the penny drops this month and next. September has always traditionally been a terrible month for the market and October has been rough as well.
 
McG said:
We need to put our efforts into figuring out how to get Americans to start using "Loonie" as the term for a one dollar coin.
apnews.com

Heads or tails? $1 coin with Trump's face and gold finish goes on sale

The U.S. Mint has started selling a $1 coin to celebrate America's 250th birthday, featuring President Donald Trump's face on one side.
apnews.com apnews.com
Click to expand...

Some people on the internet have pointed out that date on the coin is "1776-2026." So does that mean the US democracy ends this year?
 
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