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Speaker 1: Looks like the bond market ultimately forced Donald Trump's hands

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Speaker 1: to pull back on those tariffs.

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Speaker 2: Un market is very tricky. I was watching it. But

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Speaker 2: if you look at it now, it's beautiful. The bond

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Speaker 2: market right now is beautiful. But yeah, I saw last

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Speaker 2: night where people were getting a little queezy.

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Speaker 1: So beautiful. Liam dan is the Herold's business editor at large.

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Speaker 1: Liam good evening, Hey, right, what was wrong was where

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Speaker 1: the bond markets were going.

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Speaker 3: Well, the yield or the interest rate on the US

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Speaker 3: Treasury bonds was going up, and it was going up

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Speaker 3: quite fast, and that was going up. It's sort of

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Speaker 3: there's an inverse relationship between the price of a bond

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Speaker 3: and the yield on it, and the price of the

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Speaker 3: bonds was going down, suggesting that they were being sold

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Speaker 3: off around the world. A few possible reasons for that.

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Speaker 3: You know, you've got investors all over the world worried about,

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Speaker 3: you know, just how safe a bet the US is. Traditionally,

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Speaker 3: when markets are in turmoil, US treasury bonds are the

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Speaker 3: safe place to go, and so that's been undermined somewhat.

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Speaker 3: Some people suggesting that the Chinese, who have you know,

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Speaker 3: about a trillion dollars worth of own about a trillion

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Speaker 3: dollars worth of US debt or US bonds, maybe selling

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Speaker 3: them off to to force his hand, to force his hand,

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Speaker 3: although that would hurt them as well, So it is

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Speaker 3: kind of a nuclear option because you know, as the

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Speaker 3: price falls, they lose the value of them. You know,

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Speaker 3: they lose value, So a bit of that. But either way,

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Speaker 3: you know, whether it was the Chinese or all of

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Speaker 3: you know, a whole bunch of the countries, or just

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Speaker 3: general loss of faith, it was spiking really fast, and

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Speaker 3: that's a real problem. You know, when you have a

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Speaker 3: when interest rates go up faster than predicted, companies that

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Speaker 3: have an amount of debt that might have seemed like

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Speaker 3: an okay amount of debt suddenly is a problematic amount

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Speaker 3: of debt. And we saw that in the GFC when

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Speaker 3: the overnight lending rates spiked to the point that the

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Speaker 3: market just froze up and then big banks started all over.

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Speaker 3: So you can't let that happen. They often say that

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Speaker 3: the bond market is, you know, the most powerful political

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Speaker 3: or financial economic force in the world. I mean, the

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Speaker 3: whole world runs on debt, and when that seasons up,

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Speaker 3: things just stop happening.

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Speaker 1: So that's meant to be the safest of safe right,

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Speaker 1: that's the.

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Speaker 3: Same absolutely so, so in a way, you know, in

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Speaker 3: Donald Trump sort of playing poker with with this the

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Speaker 3: very idea that the US is the primary safe haven,

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Speaker 3: you know, that the number one place for you know,

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Speaker 3: the dominant economy in the world.

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Speaker 1: And back home, the INSIDEX finished today high was up

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Speaker 1: three point.

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Speaker 3: Yeah, about three point four, three point five.

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Speaker 1: But they're still not recovering what I'm not recovering.

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Speaker 3: And yeah, the bond yields, I guess they're looking beautiful now,

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Speaker 3: they're looking beautiful. They're stable, but the situation we're in,

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Speaker 3: so there's been a backtrack on the tariffs for all

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Speaker 3: the countries except China. But the tariff one hundred and

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Speaker 3: twenty five percent on China and they've got the reciprocal

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Speaker 3: eighty four percent. That seems like it just can't stand.

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Speaker 3: I mean, how does how does the US economy and

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Speaker 3: the Chinese economy function with those tariffs? Not very well,

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Speaker 3: I would have thought, and that's going to be huge

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Speaker 3: fallout for the world. So really that they have to

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Speaker 3: get to the negotiating table. But there's obviously a lot

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Speaker 3: of you know pride pride, and that they have to

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Speaker 3: get there and save some face. So Donald Trump doesn't

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Speaker 3: want to look like he's back down against the Chinese.

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Speaker 3: I'm sure Jijinping doesn't want to look like that either.

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Speaker 3: But it's problematic if this goes from a sort of

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Speaker 3: a sort of feels through surreal at the moment, because

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Speaker 3: we yet to see the reality of these tariffs hitting

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Speaker 3: consumers and hitting the manufacturers. But that's going to happen

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Speaker 3: in the next few days if something doesn't give.

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Speaker 1: Lilliam Dan appreciate your analysis, as always ends in here,

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Speaker 1: Business Editor at Large.

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Speaker 3: For more from Heather Duplessy Allen Drive, listen live to

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