The Bond Market Chaos Is Coming for Us All
About this episode
Can the Trump administration force down bond yields, and what happens if it fails? Wigglesworth, editor of the FT's Alphaville blog, explains why the US Treasury market — the world's most important financial market — sets borrowing costs for everything from mortgages to corporate debt. America now carries roughly $40 trillion in debt, with interest payments exceeding defense spending, and post-COVID inflation has pushed yields higher. Treasury Secretary Scott Bessent has tried jawboning, modest buybacks (dismissed as a 'water pistol'), and pushing for a dovish Fed chair in Kevin Warsh to bring rates down. Wigglesworth is skeptical: markets of that scale cannot be engineered, hedge-fund leverage and foreign buyers add fragility, and the AI investment build-out is crowding out government borrowing. If the plan fails, the 'bond vigilantes' could force a crisis — and Klein worries the interventions are corroding the dollar's exorbitant privilege.