Trump to FIRE Powell as the Fed Prepares to BAILOUT Wall Street (Uncut) 04-19-2025

CRISIS: Trump to FIRE Powell as the Fed Prepares to BAILOUT Wall Street After Freak Bond Sell-Off

Welcome back everyone, thank you so much for being here today. Dramatic bond market selloff, declines in the stock market, and recession warnings have been all over the main headlines in the past week. A top Fed official indicated that the Federal Reserve is prepared to step in to bail out the bond market if needed.

In this quick video, I’ll walk you through the key events and the main points to help make sense of the latest events. So in early April, something big shook the financial world. The US bond market experienced one of its sharpest selloffs in recent memory.

The 10-year Treasury yield surged from 3.86% to 4.5% in just 5 days, a level that we haven’t really seen since 2007. And the 30-year yield, well, it hit 4.92%, marking its biggest three-day jump since 1982. Fed Chair Jerome Powell hinted at the Federal Reserve being effectively ready to step in if worst comes to worst.

Might there be another bailout on the horizon? Well, quite possibly. President Donald Trump said that he has been watching the bond market and he thought that investors had gotten, quote, a little queasy. Trump understands, of course, that what the White House is able to achieve, what it’s able to accomplish during his second term may be driven to a large extent by how the bond market responds to his policy choices, including the trade war with really the rest of the world, tax cuts, and the rising government spending.

US government bonds are effectively loans to the Treasury. Historically, bonds are considered one of the safest bets in finance. These bonds represent an enormous multi-trillion-dollar market that everyone from individual investors to pension funds to multinational companies and even foreign governments invest in.

So what is driving this chaos in the bond market? Let’s break this down in very, very simple terms. There are several main drivers, but all of them boil down to surging uncertainty and deteriorating outlook as confidence in the United States continues to decline. The first reason that I will point out, as many of you may already know, are escalating trade tensions.

With major tariffs slapped on Chinese goods, global trade has been rattled and investors, of course, are not thrilled. These tariffs are adding inflationary pressure, slowing international investment, and also tariffs are pushing bond yields even higher. It is a policy choice that has profound implications.

Second, Federal Reserve uncertainty. President Trump just said that he is looking into whether replacing Fed Chair Jerome Powell is something that is within his authority. Well, of course, it is not, but that appears to be in the pipeline as the two of them do not quite get along and it’s been going on for too long.

Despite hints at rate cuts, they’ve been really slow to act, and President Trump pointed out that that is exactly what he doesn’t like. The Federal Reserve hasn’t cut rates aggressively, despite signs that the economy might need help. Of course, if they cut rates, they effectively give up on inflation, so this is a very difficult position to be in.

Bond traders are interpreting this in a few ways. The Fed may not be in control of inflation as one of their gases, or worse, it may be too hesitant to act to prevent a slowdown. Either way, this creates fear among investors that the Fed’s next move might be a little too late, which adds to the already out-of-control volatility that is created by Trump’s flip-flopping on his trade policies.

President Trump said that he wants Powell to cut rates, despite the fact that a US president cannot really dictate Fed’s policies, of course. Fed’s recent statements create a doubt about the ability to tame inflation, or stir at least the economy back on course. When the Fed waivers like this, investors get nervous, and that nervous energy hit the bond market really, really hard in April.

The third reason is the elephant in the room, it is the rising US debt issuance. On top of all of this, the US is issuing a massive amount of new debt. When more bonds are flooding the market, it pushes prices down, of course, and it pushes yields up.

It’s classic supply-demand, it is very, very easy to understand, but in this case, the stakes are just extremely high. Rising yields underscore the decline in confidence. When bond prices fall, yields rise, and that’s what’s happening now, and it’s happening very fast.

Rising yields, especially on long-term bonds like the 10-year Treasuries, can mean that one, investors want higher returns to hold government debt, which usually signals higher inflation expectations, of course, higher risks, or both, which I would argue is the case here. It can also indicate reduced demand for US debt, possibly from foreign investors or big institutions who are worried about future US stability or global turmoil. This, of course, is a major, major problem for the United States.

The less appealing US bonds look to investors, the higher the yields have to be in order to sell those bonds to investors. High risk, high return, it makes sense. When yields go up, borrowing costs in our country, across the board, increase as well, including borrowing costs for US consumers.

The US is issuing a ton of new debt to cover its spending, and someone has to buy all of that paper. When supply outpaces demand, prices drop and yields rise. This can lead to higher borrowing costs for businesses, for households, and it strains the government budget, of course.

Imagine paying more interest on trillions in debt. US costs to service its debt exceeded $1 trillion annually back in 2023. In 2024, the cost of debt servicing reached $1.15 trillion, with net interest payments totaling $843 billion.

This represents a significant portion of the federal budget, exceeding spending on national defense and on Medicare. What does all of this mean for you, you would ask? Well, higher bond yields equal higher borrowing costs, so that is really bad news. This bond market sell-off isn’t just a finance story.

It is not something to be dismissive of. This affects everything from mortgage rates to credit cards to business loans. Higher yields mean higher borrowing costs, as I just mentioned, which slows down spending, it slows down hiring, and it also decreases the prospect of economic growth.

It is a warning sign of potential recession, or something much worse than that. And this is just one of many, many warning signs that we’ve been seeing for a while. Where do we go from here is the big question.

Investors are watching the Fed’s next move really closely, and they’re keeping an eye on global reactions to U.S. trade policies. One thing is clear at this time, the bond market isn’t just reacting to headlines anymore, it is sending a message. And right now, that message is full of uncertainty.

Jerome Powell is fully aware that all signs point to a major economic downturn in the near future. And this is precisely why one of Fed’s top officials shared that there might be another bailout, this time of the bond market. The Federal Reserve would absolutely be prepared to deploy its firepower to stabilize financial markets should conditions become disorderly, according to one of the central bank’s top officials’ reports Financial Times.

Susan Collins, head of Boston’s Fed, said markets are continuing to function well and that we’re not really seeing liquidity concerns overall. But then she said the central bank does have tools to address concerns about market functioning or liquidity should they arise. She added the Federal Reserve has at its disposal additional standing facilities that can help to support market function that are already in place.

So in other words, it is becoming too obvious, even for the Fed officials, not to admit that the economy is about to hit a major, painful roadblock as the result of years of uncontrolled spending and the latest policy moves that escalated global trade tensions without any off-ramps. We’ll continue watching and updating you here on my channel as well as on Substack. Make sure that you are subscribed.

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Bye for now.