A new word was added to investors’ vocabulary in April.
“Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
So said President Trump seven days after his Rose Garden Liberation Day presentation of unexpectedly high tariffs on US imports. His words were a justification for placing a 90-day pause on most of those tariffs. However, he still left a 10% baseline tariff in place and increased Chinese tariffs to a total of 145%.
‘Yippy’ was not a word many in the markets recognized. It turned out to be a golfing term, suitable for the owner of several golf courses, attributed to those whose nervousness impedes their playing ability – think of the crucial putt. In the best of Trumpian traditions, it was not altogether clear who “the people” were or what they were getting “yippy” about. However, the general interpretation was that the President was himself becoming yippy about the state of the US Treasury market.
That market, through which the US Treasury fills the gap between government expenditure and government borrowing, is worth about $28.6 trillion. To put that in perspective, the UK government bond (gilt) market is about £2.7 trillion – a little more than an eighth as large. It is fair to say that the US Treasury market underpins global finance. The return on the US government’s 10-year bond (4.3% at the time of writing) is often considered the global risk-free rate of return. US government bonds are commonly used as collateral for a wide range of trades and held by foreign central banks as a home for their dollars.
In the days running up to Trump’s yippy statement, there were rumblings that all was not well with the US Treasury market. Longer-term yields were rising sharply, and an auction of a new 3-year bond was poorly received. Given the amount the US government borrows – $7.3 trillion in the first three months of 2025 – Trump could not risk upsetting the market to the point where the buyers of government paper went on strike.
If you are getting a slight feeling of déjà vu, you are not alone. Some coverage suggested it was Trump’s Liz Truss moment. The global message: government bonds and their markets matter.
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