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● UK’s Bond Binge – Political Play?

U.S. Credit Rating Downgrade, Trump’s Moves, and Global Changes in the Treasury Market

1. Key Details of Moody’s U.S. Credit Rating Downgrade and Market Reaction

The U.S. credit rating has been downgraded by Moody's.
This has increased concerns about U.S. economic uncertainty and repercussions in the global financial market.
However, most global stock and bond markets were closed over the weekend, limiting the real-time reflection of the impact.
There are no signs of excessive impact in the cryptocurrency market, which trades 24 hours a day.
This can be interpreted as a factor supporting financial stability.

2. Trump’s Reaction and Political Moves

Former President Trump has not shown a strong official reaction to the Moody's credit rating downgrade issue.
On Truth Social, he only mentioned the need for tariff policies and interest rate cuts, and strongly criticized Walmart's price increases.
Trump delivered a message: "Walmart, stop passing on tariff increases to customers and absorb some of last year's profits."
He urged Powell (Fed Chairman) to cut rates quickly, saying that "Delaying the timing of interest rate cuts will exacerbate the economic crisis."
Trump campaign officials and personnel also questioned the credibility of Moody's economists, mentioning their political background.
However, it is pointed out that there was confusion, as Moody's economists (analytics) and credit rating departments (ratings) are separate.

3. U.S. Fiscal Deficit, Long-Term Interest Rates, and Global Economic Impact

The core background of the U.S. credit rating downgrade is the fiscal deficit and increasing national debt, due to an unsustainable structure.
This raises the possibility of increased upward pressure on U.S. long-term (10-year) Treasury yields.
Rising long-term Treasury yields lead to concerns about increased economic burden and reduced effectiveness of the Fed's interest rate policies.
Both Trump and the current administration are interested in managing long-term interest rates, which is a major variable for the mid- to long-term U.S. economic outlook.

4. Changes in Major Countries’ Purchases in the Global Treasury Market

As of March, the UK surpassed China to become the second-largest holder of U.S. Treasuries.
The UK has rapidly increased its holdings of U.S. Treasuries in recent months. Japan has also expanded its holdings for three consecutive months.
On the other hand, China continues to sell U.S. Treasuries, signaling strategic decoupling.
The UK and Japan's close economic and security ties with the U.S. can be interpreted as a signal of strengthened cooperation.
In particular, the UK is the fastest country to negotiate with the U.S. in terms of trade strategies, including tariff negotiations.
The purchase of U.S. Treasuries is emphasized as evidence of "political + economic" complex trust.
In the wake of the pandemic, the meaning of changes in holdings by major countries amid geopolitical risks and hegemonic competition is growing.

5. U.S. Treasuries and Policy Implications from a Geopolitical and Hegemonic Perspective

The U.S. Treasury issue is not just economics but a symbolic arena of international politics and hegemonic structure.
Allies such as the U.S., UK, and Japan demonstrate strategic trust through alliance military and economic solidarity and the purchase of U.S. Treasuries.
Competitors such as China are reducing the intensity of U.S. Treasury holdings and changing their positions.
It is time to pay attention to U.S. fiscal, interest rate, and trade policies, as well as the entire global hegemonic structure.

< Summary >

• Moody's U.S. credit rating downgrade has limited short-term impact on global financial markets.
• Trump is refraining from reacting for now, mentioning direct economic policies such as tariffs and interest rates rather than Moody's.
• Rising U.S. Treasury long-term interest rates and fiscal deficit issues inevitably affect global capital flows and economic prospects.
• U.S. Treasury holdings are increasing mainly in U.S. allies such as the UK and Japan, while China is selling.
• In the future, the U.S.-China hegemonic competition, global financial market stability, and U.S. Treasury yields should all be closely watched.

U.S. Credit Rating Downgrade, Changes in the Global Treasury Market, and Economic Outlook Summary

The impact on global financial markets after the U.S. credit rating downgrade is not significant.
Trump advocates for tariff and interest rate cuts rather than Moody’s, and pressures major companies such as Walmart.
Amid growing concerns about rising long-term interest rates and deepening U.S. fiscal deficits, the UK and Japan are expanding Treasury purchases, while China is selling.
Changes in the positions of the U.S., UK, Japan, and China in the global economic and hegemonic competition structure should be closely monitored.
Key economic keywords such as economic outlook, U.S. interest rates, Treasury market, hegemonic competition, and global finance need to be paid attention to.

[Related Articles…]

• U.S. Long-Term Interest Rates, Double Variables in the Era of Hegemonic Competition
• Global Stock Market and Exchange Rates, Outlook After the U.S. Credit Rating Downgrade

*YouTube Source: [Maeil Business Newspaper]

– [홍장원의 불앤베어] 미국 국채 급격히 늘리는 영국. 국채는 결국 정치 영역인가.