💸 Why is a market crash beneficial for Trump?

Friends, the image summarizes the rationale behind the current administration’s actions and the reasons why they negatively impact the market in the short term.

1️⃣ In the next six months, $7 trillion in debt needs to be repaid. If not, it will have to be refinanced.

2️⃣ The Trump administration does not want to refinance the debt at rates above 4%, yet this year, the yield on 10-year bonds reached 4.8%.

3️⃣ How can the yield on 10-year bonds be lowered? By creating the perception of slower economic growth, demonstrating that the inflation reduction program is working, and pushing for lower interest rates.

To achieve this, tariffs are introduced, causing uncertainty in the markets. As a result, investors start selling stocks and buying bonds, which lowers their yields.

🔎 This, in turn, gives the Federal Reserve grounds to cut interest rates, making debt refinancing even cheaper.

Although tariffs typically lead to higher inflation and should, in theory, increase bond yields, the opposite is happening: fear in the market is driving investors toward safe-haven assets — specifically, bonds.

❕ This is exactly what Trump’s team is aiming for in the short term — to reduce the cost of servicing the national debt 🐳