In times of trouble, people usually feel safe buying U.S. government bonds. These bonds are seen as very secure because the government is expected to always pay back what it owes. However, recently, President Trump’s actions have made some investors worry about the reliability of U.S. government debt. His decisions, especially regarding trade with China, have made people think that the U.S. government may not be as responsible as they thought.
Because of this uncertainty, many investors have started selling their bonds. This has caused interest rates to go up, which is not good news for things like mortgages and loans, as they also become more expensive. Last week, the 10-year Treasury bond’s interest rate went up by a lot, the most it has in a long time. At the same time, the value of the American dollar has been going down, which is not what most people expected with the tariffs in place.
Experts believe that this lack of faith in the U.S. government’s ability to manage the economy is causing these changes in the bond market and the economy.
Vocabulary List:
- Reliability /rɪˌlaɪəˈbɪlɪti/ (noun): The quality of being trustworthy or of performing consistently well.
- Uncertainty /ʌnˈsɜːr.tən.ti/ (noun): The state of being unsure or having doubts about something.
- Mortgages /ˈmɔːr.tɪ.ɡɪs/ (noun): Loans specifically for purchasing property typically secured by the property itself.
- Tariffs /ˈtær.ɪfs/ (noun): Taxes imposed on imported goods and services.
- Treasury /ˈtrɛʒ.ər.i/ (noun): The department responsible for managing a government’s revenue and finances.
- Investors /ɪnˈvɛstərz/ (noun): Individuals or entities that allocate capital with the expectation of a financial return.
