| A GREY SWAN PUBLICATION | Friday April 4, 2025 | Ripple Effect — April 4, 2025
Traditional financial theory states that U.S. Treasures are a risk-free investment. That's why the entire world rushes to buy Treasurys when there's market fear.
Yes, in time, that theory will be tested by a debt crisis. Once that happens, the U.S. government may simply decide to print money and pay down its debt, causing another wave of inflation – a sort of stealth default. Or we could face an outright default, as many other sovereign nations have done at one point or another. But that's a story for another day.
For now, with markets firmly in "risk-off" mode, money is flocking to Treasury bonds. That's pushed the 10-year U.S. Treasury yield below 4%, for the first time since October 2024. 
The 10-year is the benchmark for the Treasury market, since that rate tends to impact mortgage and auto loan rates. It's truly the most important data point in traditional financial markets.
While yields are dropping, existing bondholders are seeing the price of their holdings rise. Not a bad deal, especially relative to stocks.
We've anticipated falling interest rates, and our model portfolio, available to members of the Grey Swan Investment Fraternity, has a holding designed to best profit safely from falling interest rates with a bond ETF.
Admittedly, bonds haven't performed as well as gold year-to-date, but it's starting to catch up amid this market tantrum.
With President Trump's repeated demands to lower interest rates, there's still room to play this trend.
That's because of the $37 trillion (and counting) of America's national debt, a full $28 trillion of that comes due for refinancing over the next five years. With rates coming down, America has a fighting chance to refinance its debt more cheaply and delay a debt crisis. But it's still in its early stages, and there's likely more pain ahead.
Andrew
As always, your cheerful reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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