Trump’s “Yippy” Justification for Tariff Delay
A new word was added to investors’ vocabulary in April.
“Well, I thought that people were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.”
That statement, delivered a week after his ‘Liberation Day’ tariff announcement in the Rose Garden, served as President Trump’s rationale for a 90-day pause on the majority of the tariffs, though he retained a 10% baseline and increased Chinese tariffs to 145%.
The Significance of the US Treasury Market
The term ‘yippy’ caused widespread confusion in financial circles, familiar only to viewers of the popular soccer comedy, Ted Lasso. Its true origin, a golfing expression describing performance anxiety – particularly relevant for a golf course proprietor – added to the bewilderment. True to form, President Trump’s intended meaning, specifically who ‘the people’ were and their source of ‘yippiness,’ remained ambiguous. However, the prevailing consensus pointed to his growing unease regarding the US Treasury market.
This market, vital for bridging the gap between US government spending and revenue, commands a staggering $28.6 trillion. For comparison, the UK’s gilt market, at approximately £2.7 trillion, is barely an eighth of its size. The US Treasury market’s pivotal role in global finance is undeniable. The 10-year US Treasury yield, hovering around 4.3% at the time, serves as a benchmark for global risk-free returns. These bonds are essential collateral for numerous trades and a cornerstone of foreign central bank dollar reserves.
Echoes of the Past: Trump’s “Liz Truss Moment”
Leading up to Trump’s ‘yippy’ pronouncement, anxieties about the US Treasury market were escalating. Sharp increases in long-term yields and a disappointing 3-year bond auction signaled potential instability. With the US government’s massive borrowing needs – $7.3 trillion in the first quarter of 2025 alone – the President couldn’t afford a market backlash that might deter bond buyers.
If this situation feels familiar, you’re not alone. Several commentators likened it to Trump’s own ‘Liz Truss moment.'”
The global message: government bonds and their markets matter.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
