Heather Long writes:

President Donald Trump is pushing the economy into a recession. The early signs are already apparent with autoworker layoffs in Indiana and Michigan, a stock market sell-off in recent days and Americans pulling back on spending. But as Trump’s tariffs took effect in the wee hours of Wednesday morning, something even more alarming occurred: panic in the bond markets.

Investors started dumping U.S. government bonds. They sold and sold and sold. This is not normal. Typically, U.S. government bonds are a safe haven. Whenever stocks tank or there’s turmoil around the world, investors rush to buy plain vanilla bonds from the U.S. Treasury. It’s the equivalent of chicken soup for unhealthy markets. But suddenly, those bonds turned bitter.

Ultimately, Trump caved to the bond markets. He admitted to reporters that “people were getting a little queasy” in the bond market. He didn’t want to follow the fate of British Prime Minister Liz Truss, who resigned in humiliation in 2022 after a similar bond market fiasco in reaction to her policies. [Continue reading…]