Today, the US Treasury bond market almost crashed. That's the boring event of the day, but was the primary event that caused President Trump to reverse course on the high blanket tariffs (the blanket tariffs are now 10%) except the tariffs against China, which he increased to 125%. Trump reversed the blanket tariffs while his trade representative, Jamieson Greer, was telling Congress that Trump was not changing course on tariffs—he had no clue. This escalated today, and it escalated quickly.
The United States is financially dependent on a constant supply of cash that comes from the sale of Treasury bonds. Someone pays $10,000 for example, and we—the United States—promise to pay them 4% interest for 10 years. So, we pay them $400 per year for 10 years (the timeframe could be 1 or 5 years, or 6 months—you these for the amount of time you want to lock that money up. In this example, I'm going with a 10 year bond). After the 10 years, the bond "matures" and you have your money back to do whatever you like.
The US depends on this. This is what the majority of our national debt is. When we borrow money, that's generally how it's done. We depend people and governments—investors, banks, hedge funds, grandmas, China, Japan, the EU, etc...—lending us money like this in order to pay the national bills.
The problem today was the secondary market. When you lend money to the United States in the form of a treasury note, it's not like your money is completely inaccessible; you can sell the bond to someone else. In the secondary market, the bond price can rise and fall depending the rate of the bond, current rates, and other factors. So, the price is not guaranteed. If you purchased the bond for $10,000, you may get $9000 for it in the secondary market, or you may get $11,000, or any other number, in theory. The price is not guaranteed, but is instead determined by the market. To put it simply, whatever price people will buy the bond for, that's the price of the bond. If they can get a better interest rate from the the US government, they'll buy it directly from the US government. Therefore, the secondary market on a normal day, gives you about the same deal you can get from the government itself.
Importantly to this story about Donald Trump's quick reversal on tariffs, the United States does not get any money when treasuries are sold on the secondary market. We are very dependent on everyone purchasing treasuries directly from the government.
In recent days, large investors and hedge funds have been pinched by their various investments in the stock market stocks began to crash. They've needed money fast, and so they looked to their treasury bonds and started to sell.
The normally-boring secondary market for US treasuries came to life, and did not follow the usual boring plan. This strange blend of incentive and panic made bonds on the secondary market very attractive to those who thrive on treasuries as investments.
Between April 7 and today, April 9, the interest rate paid on a 10 year treasury bond on the secondary market rose from 4.59% to 4.76%. This may not seem like a lot, but in the grand scheme, that really is a rapid rise. Meanwhile, the United States wants to borrow your money for 10 years and pay you 4.2% interest. What this means in practice is: If I'm an investor who wants to invest $100 million in 10 year US treasury bonds, United States taxpayers will pay me $500,000 more per year if I buy them on the secondary market, than if I buy them directly from the US government, and therefore I will not buy them from the government.
The result is that the United States can't attract enough investors to keep the government running.
That was a long-winded way to say that Trump reversed course on his stock-market crashing tariffs in order to save the country from something like a national bankruptcy. Someone in his circle got it through his head what was actually happening.
https://www.cnbc.com/quotes/US10Y
4.76
https://www.reuters.com/markets/rates-bonds/global-markets-tariffs-treasuries-analysis-2025-04-09/
https://home.treasury.gov/sites/default/files/interest-rates/real_ltcompositeindex.xml
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