Markets move on from tariffs as debt crisis takes hold: deVere

Global financial advisory and asset manager, deVere Group, has warned investors to brace for impact as markets move on from tariff volatility and approach a new threat: the US debt crisis.

deVere’s chief executive, Nigel Green, said the “looming US yield crisis” as a result of the country’s mounting debt is now front of mind, after a US federal trade court ruled to block the Trump administration from imposing excessive tariffs – however, as of May 30, this decision was temporarily reversed by a federal appeals court.

“Tariffs might get headlines, but due to the TACO (Trump Always Chickens Out) trade theory, they’re no longer dictating asset prices,” Green said.

“Markets have moved on. What they’re starting to price now is the risk that the US government loses control of its borrowing costs. That’s the real crisis.

“Markets are responding accordingly [to the pause in tariffs]. Equities are holding firm. The dollar has steadied. Volatility has dropped.

“Investors are betting that tariffs will be watered down or delayed, and that headline risks will no longer translate into sweeping policy shifts.”

Green said investors have instead zeroed in on the nation’s rising debt, now standing above $34 trillion, and its impacts on Treasury yields on borrowing costs, equity valuations, corporate credit and real estate.

“The US is issuing debt at a faster rate than global investors can absorb without demanding higher returns,” he said.

“This isn’t inflation-driven, it’s supply-driven. When demand for US bonds weakens at the same time as issuance surges, something has to give—and that’s price.

“The bond market isn’t a political enemy you can discredit or sidestep. It’s the most powerful pricing mechanism in the world—and right now, it’s flashing amber.

“The danger now isn’t a trade war. It’s a bond revolt. The focus has shifted from tariffs to Treasuries. That’s where the next global risk shock could come from.”