T-Bonds and stocks came down so hard today that I now give my ‘outrageously bullish scenario’ (see below) no better than a 50% chance of surviving.
Putting aside gold’s globally unnerving price surge, June T-Bond futures bulldozed a path down to as low as 100^12. If that should come to pass, the implied rise in interesting rates would be sufficient to tip the U.S. and global economies into eclipse.
A reported $7.5 trillion in Treasury debt must be refinanced over the next three years, much of it in 2025. It is therefore a particularly bad time for the Masters of the Universe to lose control of long-term rates. Beleaguered consumers will struggle even harder, and an already tottering commercial real estate market will finally give up the ghost. Residential real estate is about to deflate as well, putting a potentially economically rejuvenating refinancing cycle so far out of reach that Baby Boomers might not see another in their lifetime.
Trump will get the blame, and deservedly so. Usually, economic cycles of boom and bust are much bigger than the presidency, but in this case, if stocks continue to fall, Trump will surely have been the catalyst.
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