Even Trump is not unhinged enough to ignore bond markets, but uncertainty is here to stay

A week ago we all asked where Donald Trump's pain threshold lies when stock markets gagged on their first taste of the president's tariff "medicine".

- Nils Pratley

Now we have an answer: it is when selling spills into the US government bond market and there is intense talk of negative feedback loops and financial Armageddon.

"The bond market is very tricky, I was watching it... people were getting a little queasy," said Trump on Wednesday, understating matters wildly as he explained his tariff "pause".

The reality was that bond markets were in revolt because the world's richest economy seemingly no longer cared about credibility in policy-making or about being the anchor of the world's financial system. It was prepared to risk recession by declaring a trade war on the rest of the world, including its political allies, on the basis of dodgy formulas and made-up definitions of reciprocity. Technical selling by hedge funds in need of cash probably added to the pressure, but the root cause was political unpredictability.