Why Yields keep on rising?

Even thought Trump did deescalate trade war with his counter part from China, it seems that bond yields are not stopping.

Trade tensions cooling down reduces risk of recession that in turn makes US Fed less inclined to cut rates.

Interest rates reflect bond yield market, higher rates = higher yields, due to investors knowing that interest payments on government debt will be higher.

If you forgot what Bond yields are or how they operate you can go back to https://helpfultrader.beehiiv.com/p/trade-war-china-makes-a-move

There is a section on that.

Last time that PPI got released number was very low, it was due to government revising last month’s data up. That kind of made this last month look way better than it should be.

Likely scenario that government is doing this to make inflation look better, which could help bonds go down.

With Inflation likely looking better than it is Powell can see through this and that is why rates cutting was a risky move that Fed didn’t make.

As you know US is running on huge deficits, they spend a lot more than they get back from taxes.

Just recently https://www.bbc.com/news/articles/c4ge0xk4ld1o this article came out about US losing last perfect credit rating due to debt increasing.

Same with trade deals, more imports, less exports.

Why investors are worried and how does that make bond yield price stay high?

Simply due to US deficit being almost 7% of GDP, in Europe that would be budget breaking rules.

Investors are buying credit default swaps, which is insurance if government defaults on its own debt.

Well the issue is that Investors want more money these days and so they stopped borrowing their money to US without getting bigger returns.

Investors next move?

Stocks

People are looking for safe stocks such as: Real estate related stocks, Healthcare stocks, everyday usage things like toilet paper company stocks etc., Power supply companies, Water supply companies.

But stock market is also overbought, it was on a huge rise due to retail traders overconfidence, we know it is mostly short lived in trading and stock markets.

USD/Bonds/Gold

Rate cuts seem like a high probability due to Trump pressuring Powell as well as inflation dropping on our last CPI. This in turn might weaken currently stronger dollar.

Bonds: Yields still climbing. Inflation data should have counter acted that however investors know that borrowing will be coming and Fed isn’t buying as many bonds, so investors are needed and best way to attract them is higher Bond Yields.

Gold seems to be dropping due to Yields rising and other factors, however if US Debt will have investors worried about US Debt, then they will go back to investing into Gold, due to it being safe haven.

Things that matter for traders and investors

Debt

Debt will be going up, because investors now expect to get back more from government, so no more cheap lending, this will push bond yields higher.

Tariffs

US still has heavy tariffs and they are monitoring Vietnam and how it is workaround behind China tariffs for Chinese companies. Trade is drying up slowly, but surely due to tariffs still being 40% higher compared to past.

Bond Market

It is getting harder to borrow, no more cheap money for governments and so the game is going to change for traders, now one more big player is joining fundamentals.

This will be impacting everything from US Stock prices to interest rate decisions. Debt just became relevant and so did Bond Markets.