Government Bonds

Just looking at certain bonds in Europe which appear to me to have inexplicably high yields despite either being issued in euro or having a fairly stable exchange rate with the euro. Particularly Polish and Romanian bond yields.

I see Romanian bonds are on Revolut but the yield quoted is nearly 2% lower than Google suggests is the current yield. They don't seem to be available at all on Trading212.

Does anyone know of an alternate platform where these can be traded?

Thanks.

They are on Trade Republic

Poland and Romania both operate floating exchange rate regimes with the euro. So the higher yield is (in part) to compensate for the risk of devaluation.

More generally I know enough about sovereign bonds to know that retail punters shouldn’t be holding them individually. The risk is far too concentrated.

These are Euro denominated bonds, but I still wouldn’t touch them with a barge pole

Is there a bond play after trump starting nuking equities?

presidenttttt said:

Is there a bond play after trump starting nuking equities?

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well tariffs are inflationary so that's not good for bonds like we have already seen since the covid inflation, many were investing in treasuries (US government bonds) traditionally deemed the safest investments but now the rapid devaluation of dollar also not good if you are international , well not until the dollar gets very cheap. That is actually one of the intentions of tariffs to devalue the dollar and make US manufacturing more competitive

I see us treasuries are starting to sell off now following the trump tariffs chaos. When that started happening in 2020 covid crash the US fed and central banks around the world stepped in to flood markets with liquidity. However this time trump has causes inflationary shock , not deflationary shock and they do not seem to want to bail out trump by reducing interest rates.

joe sod said:

I see us treasuries are starting to sell off now following the trump tariffs chaos. When that started happening in 2020 covid crash the US fed and central banks around the world stepped in to flood markets with liquidity. However this time trump has causes inflationary shock , not deflationary shock and they do not seem to want to bail out trump by reducing interest rates.

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The 10 year treasury yield is at 4.330% as I write this. It was a shade under 4 at the start of April... But it was 4.573% on New Years Day and 4.560% this time a year ago. Volatility is high but the yield itself isn't running away yet. I subscribe to the view that the deck chairs are moving around rather than things melting down just yet.

Trump has suddenly backed off announced a 90 day pause on tariffs, excluding China, wow.

joe sod said:

Trump has suddenly backed off announced a 90 day pause

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He's worse than Truss with his tomfoolery.

Hundreds of thousands of Americans have lost a fortune in the past few days just to see him do a massive u turn.

How anyone can take the fool seriously is beyond comprehension.

Next time Zelensky should bring the "bond markets" with him to the oval office, "Oh you actually do have the cards this time"

I'll be the the first to acknowledge how clueless I am on this topic, but today's events (so far) make me wonder how much US debt does China hold?

Does the US Govt even know?

Zobeda said:

how much US debt does China hold?

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According to the Federal Reserve and U.S. Department of the Treasury, foreign countries held a total of 8.5 trillion U.S. dollars in U.S. treasury securities as of December 2024. Of the total held by foreign countries, Japan and Mainland China held the greatest portions, with China holding 759 billion U.S. dollars in U.S. securities.

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To avoid misunderstanding, these figures are not showing US treasury securities held by foreign governments, but US treasury securities held by pesons/institutions in foreign countries. The government of the country may be one of the institutions holding US securities, but the table gives no breakdown as between government and private holders of the securities.

So it wasn't the stock markets but the bond markets that spooked trump. Also the bond markets are many times bigger than the stock markets and are traditionally what investors run to in times of trouble.
Trump and his team predicted that stocks would probably fall alot as a result of tariffs and they were prepared to take that hit but the yield on treasuries would fall as investors rushed to buy into that market. Initially that's what happened but then the bond markets themselves started selling off.

There were a number of reasons traders needed cash so were forced to sell anything, foreign holders of treasuries (all 9 trillion worth) became spooked by trump and his irrationality and also started selling , the US no longer seemed a safe place, there was not a willing market to sell all this stuff into suddenly.

Trumps plan and his rhetoric were all about getting interest rates down to appeal to his republican base but interest rates were going the other way, politically he was looking very shaky so caved in and backtracked.

But the fact that treasuries started selling off this time and also at end of covid crash but before were the ultimate safe havens during financial and dot com crashes. There was no real sell off in us bonds then although the weaker countries like ourselves experienced huge government bond sell offs in 2010 . Maybe bonds are no longer the ultimate safe havens

Government bonds are (relatively) safe havens when the cause of market turmoil is an external shock. But where market turmoil is caused by the stupidity/incompetenc/weakness of the government, piling into government bonds doesn't look like such a crash-hot idea. Hence Truss, and now Trump.

Ray dalio was saying that suddenly the markets are no longer accepting that us government bonds are safe, they are asking the question what is actually safe now.
That's what trump has shaken now the absolute confidence in the US treasuries markets, interest rates went up yesterday evening as they again were sold off .

In Irelands case it took the combined heft of the imf and eu to restore confidence in Irish bonds. If different populist decisions like "burn the bond holders" had happened then Ireland would be paying much higher interest rates on its government debt. So belatedly Brian cowen and lenihan were ultimately proven correct by not doing so.

Burn the bond holders referred to holders of bank bonds, not Govt bonds.

China actually holds some very good cards in this 'war'. A HUGE amount of debt and assets in the US are owned by Chinese investors and institutions. Imagine if they decided to call in the loans and sell off the assets.

There is a good explanation of all this on a podcast by David McWilliams (which i cant find the link to now) from before the tariff wars. Its an eye-opener to see how exposed the US economy is to China.

For Trump to take on China is probably a mistake.

The Chinese people are also more likely to weather any hardship than Trump voters, i'd guess.

I was listening to Ed Balls and George Osborne's podcast, political currency, and they were saying a 3 year auction (which tends to be a lot of institutional buyers) went fairly poorly, and time would tell if it was China ordering people at its arms length to stay out of the auction led to the low demand and higher prices.

I don't know if you can paint this all onto China - I think the world at large is looking at the US and wondering wtf is going on. I see the dollar is doing a dip now. A lot of moving parts if you're trying to trade across borders right now.