The power of the international bond markets calls into question the supposed relative autonomy from the ruling class of the Trump administration and other so-called"Bonapartist" governments. These would-be autocrats invariably capitulate in the face of higher public and private sector borrowing costs and the attendant threat of economic recession much as do the most timid social democratic governments.
The Trump administration is anxiously trying to stem rising bond yields as banks and insurance companies, pension and hedge funds, and other bond traders dump Treasuries in reaction to inflationary pressures precipitated by the Iran war and the amount of federal debt. A measure of their dissatisfaction with the performance of the economy is an increased willingness to publicly criticize the administration, as the Financial Times reports below. *The markets are breaking their code of silence on Trump* Financial Times Katie Martin Sept 5 2026 This time last year, Wall Street analysts and investors were huddling under a cone of silence, extremely reluctant to speak critically on the record about what the US administration was up to on tariffs or institutional degradation in the country or anything else. It was clear what was going on. The US president was blowing up geopolitical alliances with seemingly random trade taxes. He was seeking to bend the personnel and actions of the Federal Reserve to his will. He had already fired Erika McEntarfer, who ran the Bureau of Labor Statistics, because he did not like the labour statistics. He was picking winners and losers out of listed stocks while receiving golden gifts from corporate bigwigs seeking to curry favour. This is all before you even get to the crypto nonsense. It all stank, it undermined America’s dominance in global markets, and everyone knew it. They just didn’t say it out loud. Banks, investment houses, thinktanks and everyone in between lived in fear of annoying a president seemingly at the height of his powers or a Treasury secretary who was still considered to be a wise and stabilising force in an otherwise discombobulating administration. Direct criticism of Donald Trump’s financial lieutenants was kept very much behind closed doors. In public, it was much easier, and honestly rational, for analysts and investors to tread carefully, speak politely if at all, and leave the honest assessments to the pub. But something has shifted in the past few weeks, particularly since Scott Bessent’s Treasury department started meddling in the bond market. I mean no disrespect to stocks specialists here but in the hierarchy of markets, stocks are not considered the most cerebral of disciplines. Given stock picking hardly ever works, it is always much better to buy an index and sit on it for a few years. Bond investors, however, generally make more humble returns but consider themselves (again, rightly or wrongly) to be on a higher intellectual plane, banging on about things like swap spreads and convexity. So when Trump interfered with the majesty of free price discovery in the stock market — for example, when Intel “reached a historic agreement” to sella $9bn stake to his administration — equity investors shrugged it off. The market was broadly still on the up, so who cared? But when the Treasury department embarked on a series of actions in the bond market seemingly designed to tamp down the country’s borrowing costs, it poked a beast — a beast with an intellectual superiority complex. Slowly, and sometimes subtly, but surely, the voices calling out the administration’s inconsistencies and irrationalities are getting louder. In part this is because they now enjoy air cover from Stan Druckenmiller — macro hedge fund titan and mentor to the likes of Bessent himself and also to Federal Reserve chair Kevin Warsh. In an opinion piece in The Wall Street Journal, Druckenmiller called out Bessent’s decision to upsize his buybacks of long-term US government bonds, pleading for markets to be allowed to give bad news to policymakers. “Governments defending prices against fundamentals always lose,” he wrote. “Let the bond market speak.” Oof. On the news pages of the FT, too, other market participants have been more direct in criticism. Bessent’s thinly disguised efforts to fluff up bond prices are, some told my colleagues, “whimsical”, “self-defeating” and a “band-aid on a bullet hole” that “reduces overall credibility”. It is very hard to imagine the use of this kind of language this time last year, when the president was calling for banks to fire analysts hedid not like. Now, markets types are spotting swipes everywhere. For instance, bond nerds winced at a recent blog from Tobias Adrian, a senior markets official at the IMF, on almost his final day in his position. The blog discussed in the IMF’s typically dry diplomatic terms the challenges of central bank communication in an uncertain world. It did not mention Bessent or Warsh or the Fed. But it did mention markets’ “essential pricediscovery function” and the need for policymakers to speak “with humility”. This quickly did the rounds in bond-market circles, annotated with reactions like “ouch”. Was the Adrian blog criticism of the Fed or of the Treasury department? Absolutely not. It is a thoughtful assessment of global challenges to policymakers generally. But some bond investors took it as corroboration of their unease at the administration’s garbled messages and tinkering in debt markets. When politicians in, say, France or the UK, get into a tangle with markets, financial market analysts crack their knuckles and give the politicians hell — a healthy back-and-forth that helps politicians and voters to understand tradeoffs. We are not quite at that point of brutal honesty with the US yet. But for whatever reason — whether analysts can sense blood in the water or they are learning to live with the risk of intimidation — they are filing just a slightly sharper point on their analysis. -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. 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