Zinger Key Points
- A $100 billion post-election bond sell-off may signal rising tensions and a shift in global capital flows.
- Former Bridgewater strategist Bob Elliott warns foreign central banks could escalate a trade war into a capital war.
- Brand New Membership Level: Benzinga Trade Alerts
Bob Elliott, CIO at Unlimited Funds and former Bridgewater Associates’ strategist, is raising alarm bells over a massive, yet under-the-radar, $100 billion sell-off of U.S. bonds—right after the election.
If you were wondering what sent Treasury yields soaring and stocks wobbling in late December and early January, this might be your answer.
A Sell-Off The Size Of U.S. Debt Issuance
Elliott notes that the bond sales happened at an annualized pace of $1 trillion, matching the U.S. Treasury's net bond issuance for 2024.
In other words, foreign central banks dumped debt at the same rate the U.S. was printing it—a staggering flow in the Treasury market.
The timing?
Too precise to ignore. While analysts debated what pushed up risk premiums and yields, Elliott suggests the real culprit was these foreign fire sales.
The Bigger Picture: Trade Wars Turning Into Capital Wars?
The sell-off was partially emerging markets central banks adjusting to the post-election dollar surge, but Elliott warns it could be a test—or worse, a warning. Countries with adversarial stances toward the U.S. hold massive economic leverage through their Treasury holdings.
So far, the selling has paused. But Elliott makes it clear: if tensions escalate and a trade war turns into a capital war, the consequences for the U.S. economy could be seismic.
For now, investors should keep a close eye on any shifts in central bank behavior. If the selling resumes, buckle up—things could get volatile fast.
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