Can bond vigilantes trump Trump?
Investors are becoming ‘twitchy’ about the surge in US government bond issuance and the resultant surge in federal debt
US and South African central banks both adopted a cautious stance last week, as they seek clarity on the impact of US President Donald Trump’s proposed policies. Bond markets, in contrast, are making their opinions clear. Bond vigilantes — who curtailed president Bill Clinton’s policy agenda in 1993 and evicted British prime minister Liz Truss in 2022 — are said to be growing “twitchy”.
There were no surprises at the US and South African monetary policy meetings last week. The Federal Reserve left interest rates unchanged at 4.25%-4.5%. The Reserve Bank’s monetary policy committee (MPC) delivered a widely anticipated 25 basis point (bp) interest rate cut, taking the benchmark repo rate down to 7.5%...
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