Bond rout starting to sound market alarm bells

Corporate Value, Tariffs, and Who Pays

• Some argue aggressive tariffs and policy intervention make it harder to bound the value of U.S. companies, since future earnings can be partially “redirected” to the state via tariffs and regulation.
• Others counter that large firms (e.g., Apple) will primarily pass tariffs on as higher prices, preserving margins; the real losers are middle-class consumers through higher living costs.
• Debate over whether tariffs are a coherent long‑term strategy or just political theater, with some seeing them as part of an authoritarian, “government-picks-winners” model.

U.S. Debt, Bonds, and Default Risk

• One camp sees U.S. Treasuries as increasingly unsound: debt too high, no serious effort to shrink it, and eventual real default (via inflation or explicit nonpayment) viewed as likely.
• Others emphasize:
  • Debt sustainability is about debt/GDP and interest burden, not just nominal level.
  • Indefinite rollover is normal sovereign practice; actual nominal default is seen as unlikely.
• Disagreement on why foreigners buy Treasuries:
  • “Tribute” and geopolitical leverage vs.
  • Rational search for the safest, most liquid asset, though confidence in that safety is now eroding.

Tariffs, Rates, and Market Mechanics

• Multiple commenters note: tariffs raise prices → raise inflation expectations → push up long-term yields and hurt bond prices, contrary to claims that tariffs are “4D chess” to lower rates.
• Clarifications:
  • The Fed directly sets only very short-term rates; longer maturities are market-priced.
  • Rising yields signal both inflation fears and concern over fiscal/strategic risk.
  • The steepening 2s–10s curve is read by some as markets pricing in recession risk and policy confusion.

US–China Power Balance and Strategy

• Extended debate over who “holds more cards” in a trade confrontation:
  • One side: China can better endure pain, is less import‑dependent, and wins reputationally if the U.S. behaves erratically.
  • Other side: U.S. still has major strengths (market size, tech, finance), and rebalancing away from China was always going to hurt.
• National-security angle: some suggest de‑coupling to reduce vulnerability and war risk; others see no evidence of a coherent grand strategy.

Domestic Politics, Inequality, and Information

• Several threads link bond/tariff chaos to deeper issues:
  • “Character politics” around Trump and a partisan information ecosystem that rewards spectacle over policy.
  • Long‑term anger from deindustrialization and weak retraining, now amplified by automation.
  • Claims that “small government” rhetoric masks a push for more centralized executive power.

Proposed Alternatives

• One vision: a tightly integrated “Super West” (US+EU+allies) with shared rules, industrial policy, anti‑monopoly action, and stronger worker protections to rebuild the middle class and manage China through coordinated, targeted measures rather than unilateral tariff shocks.