Trump, Truss and the bond market's bad vibes
Reassurance is rarely needed when confidence is intact, so the fact US treasury secretary
Scott Bessent
felt obliged to insist the US 'is never going to default' was alarming in itself.
His comments followed JPMorgan Chase CEO
Jamie Dimon
's warning that a 'crack' in the bond market 'is going to happen'.
US debt as a share of GDP will likely exceed its 1940s peak in the coming years, but that's not investors' only concern. There's also the Trump administration's uneasy relationship with economic norms – in February, president Donald Trump suggested the US may have less debt than reported due to fraud – and its willingness to think the unthinkable across many fronts.
That mindset found a kindred voice in former UK prime minister
Liz Truss
, who recently resurfaced in the Washington Post to offer advice to
Donald Trump
and blame her own implosion on the 'entire Davos elite'.
READ MORE
[
In war-torn nations, Trump's travel ban brings a new hardship
Opens in new window
]
[
Elon Musk says Trump's 'big, beautiful' tax and spending Bill is a 'disgusting abomination'
Opens in new window
]
Accusing markets and global institutions of conspiring to 'bully policymakers', she claimed her downfall was driven by a 'globalist economic establishment' opposed to tax cuts and economic freedom, and complained Boris Johnson was ousted 'with a view to installing the former Goldman Sachs banker Rishi Sunak'.
Far from being run by an elitist cabal, bond prices are shaped by everything from central banks to pension funds and ordinary savers. The 'dastardly goal', as the FT's Edward Luce dryly put it, 'is to invest in a safe asset'.
If bond markets are uneasy, the cause may be less shadowy conspiracy and more about what's now thinkable.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Times
30 minutes ago
- Irish Times
Harvard in talks with universities to host students hit by Trump visa clampdown
Harvard has been in talks with leading US and international universities to temporarily house its foreign students facing bans under US president Donald Trump 's clampdown on the college. Leaders from the University of Chicago and the London Business School are among those who have held discussions on accommodating students accepted for the coming academic year at Harvard, but who are now at risk of being denied visas, according to academics at the institutions. Other US universities are examining ways to help their own current and incoming foreign students, including relocating them to campuses outside the country. The Trump administration has banned Harvard from accepting foreign students as part of its broader campaign against what it claims is liberal bias and anti-Semitism on American campuses. A judge temporarily froze the order last week, delaying Mr Trump's actions. READ MORE The administration has suspended the review of all visa applications from prospective students seeking to study anywhere in the country as it steps up background checks, including going through social media. It has also revoked visas and detained foreign students who it claims have been involved in protests, mainly against Israel over its war with Hamas in Gaza. The campaign risks cutting funding for institutions that have grown reliant on fee income from the more than 1.1 million foreign citizens studying in the US. The majority of these students are from China and India. Foreign students are estimated to generate economic benefits of $45 billion (€39 billion) a year, according to the US department of commerce. Nafsa, a network of universities and individuals engaged in international education, criticised 'an unacceptable assault on an already thorough screening and monitoring process [which] creates a climate of uncertainty and fear'. [ Trump v Harvard: University faces existential battle against opponent that would have once been unimaginable Opens in new window ] Amit Sevak, head of ETS, which runs the largest English language test for foreign students applying for universities in the US, said there had been a double-digit drop in the number of applications for the tests. 'What's happening right now with the fall semester just around the corner is that some international students may withdraw, delay or switch to applications elsewhere,' he said. 'The bigger implication will be in 2026.' Harvard launched a fresh legal effort last week to block Mr Trump's latest moves to prevent it accepting international students. 'Contingency plans are being developed to ensure that international students and scholars can continue to pursue their work at Harvard this summer and through the coming academic year,' said Alan Garber, Harvard's president. Mr Trump has focused his fiercest attacks on Harvard, which accepts 27 per cent of its students from abroad. But international students in universities across the country have expressed fears that if they return home for the summer they may not be readmitted. Suzanne Rivera, president of Macalester College in Minneapolis, one-fifth of whose students are from overseas, has launched a fundraising campaign with alumni and is creating additional internships to support foreign students who decide not to leave the US for the holidays. 'Our concern right now is that these policy shifts may erect obstacles that would prevent students returning to campus or new ones from matriculating,' she said. 'The fear is widespread for the international students among us that if they go home they might encounter difficulties trying to re-enter even if they have a valid visa.' New York University, Northeastern and Hult are among the universities with campuses in other countries, which allows them to reallocate places abroad to non-US students if visa delays persist. Several others have branch campuses in Qatar. Martin Boehm, executive vice-president of Hult International Business School, said he had not yet seen any visa problems with prospective students. 'I'm still super confident that everything runs smoothly.' However, delegating teaching to partner universities could produce complications because of different costs and academic standards, and uncertainty over whether students can receive credit for courses completed elsewhere. Grant Cornwell, president of Rollins College in Florida, which has about 10 per cent of its student body from abroad, said the presence of foreign students provided more than just financial benefits. 'Those perspectives bring enrichment to the classroom that speaks directly to our mission: have students learn with and from people who see the world differently,' he said. 'Both current and incoming students are anxious as they await visa appointments for new issuances and renewals. We think there could be a chilling effect for the following years.' – The Financial Times Limited 2025
Irish Times
6 hours ago
- Irish Times
Business leaders converge on Washington to halt Trump's foreign investment tax
Dozens of executives from some of the world's biggest companies will travel to Washington this week to push back against a plan to raise taxes on foreign investments in the US, warning it may hit millions of American jobs. The lobbying drive is targeting a provision in Donald Trump 's budget bill, which if approved by Congress would allow the US to impose additional taxes on companies and investors from countries that it deems to have punitive tax policies. Investors, US companies with foreign owners and international firms with American operations, could all be affected by Section 899 of the bill, which executives fear could cause a drop in corporate investment and a retreat from US assets. Jonathan Samford, president of the Global Business Alliance, told the Financial Times that representatives from about 70 companies would meet members of Congress this week and Section 899 would be 'a central topic'. READ MORE The threat of higher taxes has unsettled the lobby group's almost 200 foreign-owned companies in the US, which include most of the big pharma and medical device companies that have significant operations in Ireland as well as CRH, Guinness parent Diageo, Jameson parent Pernod Ricard and Kerry Group. Many of them fear a hit to the 8.4 million jobs they provide in America. 'I think there is growing momentum to get rid of this provision in the Senate,' said Mr Samford. 'Senators recognise that it's counterproductive to the economic vision for the administration, which has made a big point about trying to get more investment to the US.' A leading financial trade association is also planning for its members to travel to Washington this week to meet treasury officials and Republican members of the Senate banking committee to argue against Section 899. Beth Zorc, chief executive of the Institute of International Bankers (IIB), said: 'As passed by the US House of Representatives, Section 899 will stifle foreign direct investment, risk financial market disruptions and endanger American jobs in states and communities across the country.' The US operations of foreign banks underwrite more than 70 per cent of debt issuance for foreign companies in the US, representing almost a third of total dollar-denominated debt issuance, the IIB said. The foreign banks said they lent more than $1.3 trillion (€1.14 trillion) to US companies in 2023 and their financing of international companies supported $5.4 trillion of foreign direct investment in the US by foreign headquartered companies, generating $270 billion of revenue. The IIB, which represents some of the world's biggest banks including HSBC, BNP Paribas, Royal Bank of Canada, UBS, Bank of China and Mitsubishi UFJ Financial, as well as AIB and Bank of Ireland, is expected to push for a one-year delay to the tax rises and for a reduction in the scope of the measure. 'We encourage the Senate to address concerns about this provision and to consider modifications that will help preserve international investment in American jobs and businesses,' Ms Zorc told the FT. The measure targets countries with what the US calls 'unfair foreign taxes'. Most EU countries, the UK, Australia, Canada and others around the world would be affected, according to law firm Davis Polk. For foreign investors, Section 899 would increase taxes on dividends and interest on US stocks and some corporate bonds by five percentage points every year for four years. It would also impose taxes on the American portfolio holdings of sovereign wealth funds, which are at present exempt. Republicans in Congress have searched for ways to keep the cost of Trump's 'big, beautiful' tax bill down; Section 899 would raise $116 billion over the next decade, according to the non-partisan joint committee on taxation. Still, the overall bill would add $2.4 trillion to the US debt by 2034, according to the Congressional Budget Office. Jason Smith, the chairman of the tax-writing House ways and means committee, said recently that he hoped Section 899 was not imposed because other countries would change their laws in response. 'A big concern is that foreign governments, based on agreements entered by the Biden administration, are trying to suck away billions of dollars from US companies,' said Mr Smith. 'This is a way to help put them in check so that they understand that if they do that to US businesses, there will be consequences for their actions. Hopefully it'll never take effect.' – Copyright The Financial Times Limited 2025
Irish Times
6 hours ago
- Irish Times
LA protests: Trump tests limits of presidential authority by sending in the troops
By calling on troops to suppress protests in Los Angeles on Sunday, Donald Trump has shown he is willing to put the country on a war footing – and test the boundaries of executive power – to achieve his goals. For the first time in decades, the National Guard was deployed against citizens on domestic soil against the wishes of a state's governor, using a rarely invoked law designed to help the US fight off a foreign invasion. A US president last deployed a state's National Guard without being asked by its governor in 1965, when Lyndon Johnson sent troops to protect civil rights demonstrators in Selma, Alabama. Pete Hegseth , defence secretary, even threatened to send in the marines to quell the unrest over raids against suspected illegal migrants. That would require invoking the Insurrection Act, which last happened 30 years ago during the riots that erupted in Los Angeles after the police officers who beat Rodney King were acquitted. The deployment of the National Guard in the second-largest US city, one that is largely liberal, was 'clearly done as an authoritarian show of strength', said Ryan Enos, a professor of government at Harvard University. READ MORE 'There is no policy reason [why the administration] should be targeting places in Los Angeles as opposed to places in red states.' Tear gas fills Los Angeles streets as protesters clash with police after a raid was conducted by Immigration and Customs Enforcement. Video: Reuters The deployment is the latest effort by the Trump administration to test the limits of presidential authority and force Democrat-run states to follow federal edicts. Some scholars warn these efforts are increasingly in open defiance of political convention and the US constitution. In the space of a few days, Trump has ordered an investigation into his former presidential rival Joe Biden and officials in the previous administration, and threatened to stop federal funds flowing to California. The president floated the idea of cancelling government contracts held by businesses belonging to his former ally Elon Musk , and warned there would be 'very serious consequences' if the billionaire used his war chest to back Democratic candidates. Trump's most eager lieutenants have issued similar threats. Vice-president JD Vance suggested the spectacle of 'foreign nationals with no legal right to be in the country waving foreign flags and assaulting law enforcement' could be legally defined as an invasion. Stephen Miller, the architect of the White House's immigration policy, said the choice before the country was to 'deport the invaders, or surrender to insurrection'. He endorsed a post that called for mass deportations no matter 'what it costs', and which concluded: 'Nothing else matters if this isn't handled.' An injured protester is carried away from clashes in Los Angeles. Photograph:On Fox News, border tsar Tom Homan suggested the department of justice investigate Democratic lawmakers – including House minority leader Hakeem Jeffries – who called for Immigration and Customs Enforcement (ICE) agents not to conceal their faces behind masks when conducting raids. Justifying the deployment of troops in Los Angeles, homeland security secretary Kristi Noem claimed that Ice agents were merely going after the 'worst of the worst' – criminal aliens embedded in otherwise law-abiding communities. But rounding up day labourers who gathered at Home Depot looking for work, as Ice agents did in Los Angeles on Friday, would appear to suggest otherwise. A report by the conservative-leaning Washington Examiner last week claimed Miller had castigated Ice's high command for merely pursuing criminals, and exhorted them to round up all undocumented migrants. Ice has denied this. The broad scope and haphazard nature of the sweeps by Ice agents over the past few days was highlighted by the mistaken arrest of a US marshal in Arizona, who officials admitted had merely 'fit the general description of a subject being sought by Ice'. The White House did not immediately respond to a request for comment. A damaged police vehicle sits on the 101 freeway in downtown Los Angeles. Photograph:On Saturday, White House press secretary Karoline Leavitt defended the operations as 'essential to halting and reversing the invasion of illegal criminals into the United States'. Critics of the administration's immigration crackdown say raids are indiscriminate by design. 'Obviously, they know that mass deportations are going to be incredibly disruptive to these cities that have so many immigrants living in them,' said David Bier, director of immigration studies at the Cato Institute, a libertarian think-tank. 'They were fully expecting and hoping for this type of reaction,' he added, 'because it's good politics for them, and . . . further justifies both mass deportation and other power grabs.' Andrew Weinstein, a lawyer who served as the public delegate to the UN under president Biden, said the escalation was part of a broader strategy. 'Whether it's the unprecedented politicisation of the military, [the Trump administration's] assault on higher education under the guise of combating the very real problem of rising anti-Semitism, or the expedited deportation of non-citizens without due process, it's all a pretext to further an authoritarian agenda,' he said of recent moves by the White House. 'Each of these actions cracks the foundation of our democracy just a little bit more.' For now, public support for Trump's immigration crackdown appears to be holding up. A YouGov poll for CBS, conducted before the Los Angeles protests, found that 54 per cent of the country was in favour of the scheme. That figure dropped though when people were asked if they supported going after those who are not dangerous criminals. In contrast to Trump's first term, when then defence secretary Mark Esper refused to send the military to quash Black Lives Matter protests, there has been no real opposition to the military deployment from members of the administration, or from Republicans in Congress. For his part, Trump on Sunday did not see any reason to de-escalate. 'We're going to have troops everywhere,' he told reporters. 'We're not going to let this happen to our country. We're not going to let our country be torn apart like it was under Biden.' – Copyright The Financial Times Limited 2025
