Finance
—Boring is Beautiful—
—Bond Traders: The Real Influencers—
By Erik Raistakka (April 28, 2025)
It's the bond markets, and not protesters, who are influencing Trump's decisions on trade policy.
Nobody ever brags about getting rich in the bond market (unless you are a fan of Michael Lewis’ book “Liar’s Poker”). Rather, it’s much sexier to say you made a killing in the stock market, buying Nvidia on the cheap, gaming the Gamestop trade or convincing others that Bitcoin is on a more solid foundation than Dutch tulips or Beanie Babies.
Similarly, the flashy face of protest against the Trump administration is on the streets and in the news. Thousands participated loudly in the Easter weekend protests. It’s mostly Baby Boomers as the leaders of the Tesla Take-Down.
An outspoken generation, always-dominating Boomers aren’t the ones really pushing back — it’s the revenge of the nerds who are actually affecting the Trump trade agenda. The quiet, suit and tie crowd in the sleepy bond markets are the true influencers — no matter who is scoring the most views and likes on social media.
As someone who has studied International Economics, it is hard to justify the tariff policies of the current presidential administration, let alone many of the other blitz tactics. Even with tilted playing fields that sometimes befall us, the US still plays to its competitive advantages. Being innovators, entrepreneurs and a beacon of free trade are the reasons why our country has been the financial envy of the modern world.
Washington State is a net exporter and the proposed tariffs particularly hurt us. Whether it's apple growers, wheat farmers or wine makers in Eastern Washington, many have no easy ability to replace those lost international sales domestically. Washington’s (and the United States') top exporter Boeing is seeing China return airplanes over the tariffs; while other aircraft orders remain in question if certain customers will take delivery.
Of course, as consumers, we are all awaiting the rising prices from the proposed tariffs — even if the US could broker deals to reduce retaliatory foreign tariffs.
Let’s consider bond traders and a new concept that has arisen: The Sell America trade. This trade is widely purported as the reason why the Trump administration has tempered some of its most destabilizing trade policies.
For many years, the US has benefited from lower interest rates on its government bonds, known as Treasuries, because of the “reputational discount" we were being afforded as a safe and stable place to store funds. Average Washingtonians benefit from this with cheaper mortgages or business loans with interest rates reflecting Treasury rates.
Trump’s slash and burn style has evoked a reaction, but not the kind from Boomers boogying at rallies in front of Tesla showrooms.
Trump’s erratic tariffs, blatant ignoring of the judiciary and the calls for disregarding the independence of the Federal Reserve (which sets target interest rates for Treasuries) caused both the stock market and bond market to drop simultaneously.
This is what made Trump blink, resulting in his pausing of many of his tariffs for 90 days.
Normally when people sell stocks during a downturn, they buy safer investments like Treasuries, which in turn causes the interest rates on those bonds to lower; as investors are willing to accept less reward in exchange for that security.
But the interest rates on longer-term Treasuries actually went up recently, as bond holders sold them, or in turn would only buy them if they came with higher interest rates. Thus, Treasuries were slapped with its own tariff – a “risk premium” attached to a desire to invest in the US.
Why? Bond traders throughout the world are seeing concerns with US institutions and whether they are quite as rock solid as previously considered. This double-take on US bonds means traders are willing to seek alternatives that may now appear relatively safer to the current mayhem in the US.
This is the opposite reaction to what Trump wants — as higher interest rates now make it more expense for Americans to purchase a house, or for an American business to fund expansions to manufacturing, as the basis points grow on the interest rates now having to be paid. It also makes it more expensive for the US to finance its own debt — which currently stands at over $36 trillion.
All this is leading to President Trump to back off on the worst of his tendencies, at least for now. Most of the tariffs above the blanket 10% were temporarily paused. In addition, calls for firing the Federal Reserve president were stopped. Even buses full of immigrants bound for deportation were turned around based on the Supreme Court’s call for due process.
On a parallel market-oriented front, plunging stock price and revenues at Tesla have led Elon Musk to proclaim he’ll spend less time at D.O.G.E. and more time trying to mend his sputtering businesses.
Yes, boring can be beautiful. Bond traders have turned out to be the real influencers here. So, while it may seem more “fire” to torch a Tesla, you may wish to throw that fist bump emoji instead toward the real vigilante — the international bond trader who trashed the Treasury trade.
Erik Raistakka is the treasurer of Cascade Party Washington. He graduated magna cum laude with a degree in Economics from the University of Washington and has spent the last 25+ years managing financial benefits plans for major corporations throughout the Puget Sound.
(Image: ZUMA Press, Inc. / Alamy Stock Photo)
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