Core Truth
Investors have dumped government debt as confidence in the US economy keeps plummeting following growing concerns over the impact of Donald Trump’s tariffs.
US government raises money from financial markets through sale of bonds essentially an IOU), which are viewed as a safe investment.
The US does not normally need to offer high rates to attract buyers but on Wednesday the interest rate on bonds spiked sharply.
The 4.5%rate, which is the highest since February, is as a result of sweeping tariffs on goods being imported into the US.
Washington-Beijing trade war has escalated after the US implemented a 104% tariff on products from China at midnight on Wednesday.
Beijing hit back with 84% levy on American products.
Stock markets have been falling sharply over the past few days in reaction to Trump pressing ahead with tariffs.
However, the sale of bonds poses a major problem for the world’s biggest economy.
The interest rate for US borrowing over 10 years has spiked sharply in the past couple of days up from 3.9%.
