Trump's disastrous defeat begins to show: U.S. Treasury yields soar
The yield on the 10-year U.S. Treasury bond surged nearly 40 basis points in two days, once reaching 4.5%, while the 30-year yield briefly surpassed 5%. Renowned economist and Wall Street investment mogul Peter Schiff believes that Trump's plan to lower interest rates by creating a recession has failed, and if tariffs are not withdrawn, it will trigger a financial crisis more severe than in 2008. He also warned, "If there is no urgent interest rate cut and announcement of a large-scale quantitative easing plan by tomorrow morning, we may see a stock market crash reminiscent of 1987."
If Trump attempts to lower interest rates by creating an economic recession to alleviate the pressure of $36 trillion in national debt, it now seems that this plan may have failed and could lead to catastrophic consequences.
Recently, the U.S. Treasury market has seen consecutive declines, with the yield on the 10-year Treasury bond soaring nearly 40 basis points in two days, briefly touching 4.5%, while the yield on the 30-year Treasury bond rose above 5%, signaling serious systemic risk.
"The U.S. Treasury market is collapsing," warned renowned economist and Wall Street investment mogul Peter Schiff on X:
If there is no urgent interest rate cut and announcement of a large-scale quantitative easing plan by tomorrow morning, we may see a stock market crash similar to that of 1987.
On October 19, 1987, the U.S. stock market experienced a single-day drop of 22% in the Dow Jones Industrial Average, a day known as "Black Monday."
Trump's Catastrophic Defeat—A Financial Crisis Worse than 2008
Schiff is the founder and CEO of Euro Pacific Capital, known for his pessimistic predictions about the U.S. economy and his advocacy for physical assets like gold. Schiff believes that the collapse of the U.S. Treasury market signifies the failure of Trump's plan to lower interest rates by creating a recession:
If Trump's secret agenda was to lower long-term rates through a stock market crash, then this plan has failed. The stock market crash not only failed to alleviate pressure on the bond market but instead exacerbated the turmoil in the bond market.
Since returning to the White House, Trump has pressured Ukraine to sign a mineral agreement, recklessly wielded "tariff sticks," and frenziedly cut government employees and reduced government spending, with various maneuvers aimed directly at "Americanizing debt"!
Noted investor Larry McDonald pointed out in a recent podcast that the $36 trillion U.S. debt issue is urgent. If measures such as increasing tariffs and massive layoffs lead to a short-term recession, it could create conditions for lowering interest rates A 100 basis point reduction in interest rates can save up to $400 billion in interest expenses.
However, as Schiff pointed out, this "bone scraping to cure poison" type of reform plan may have already failed and could lead to catastrophic consequences. Schiff noted:
The current collapse of the bond market has a more severe impact than the collapse of the stock market. If these tariffs continue to exist, the United States may face a full-blown financial crisis this fall, which will make the 2008 financial crisis look like a Sunday school picnic.
In addition, the "full deleveraging" of hedge funds and the urgent unwinding of trillion-dollar basis trades further exacerbated market instability, reminiscent of the liquidity crisis in March 2020. Is the market prepared?