This is an edited transcript of “The Ezra Klein Show.” You can listen to the episode wherever you get your podcasts.
The U.S. Treasury market is the most important financial market in the world, bar none. Most of us don’t participate in it directly — we don’t go in the morning to buy Treasury bonds — but Treasury bonds define everything from how the stock market ends up performing to the cost of a mortgage, a car loan, a credit card. There is almost nothing financial they do not touch.
The U.S. Treasury market has been looking a little weird lately. The cost of borrowing for the U.S. government is going up, probably because our debt recently surpassed $40 trillion. We now spend more on interest on that debt annually than we spend on the entire defense budget.
Donald Trump has also been more and more erratic.
Archival clip of Donald Trump: There’s never been in history the kind of money coming into a country as we have right now.
Scott Bessent, his Treasury secretary, has been making some more aggressive moves into the market.
Archival clip of Scott Bessent: Think of it as pulling back the slingshot here. We have a lot of potential energy that will turn into kinetic energy.
What is going on with U.S. Treasuries? Why does the Trump administration seem so freaked out? And what might happen from here?
Robin Wigglesworth is the editor of the Financial Times blog Alphaville. He’s the co-host of their podcast “The Story of Money” and the author of a forthcoming book, “A Fabulous Debt: The Epic Story of How Bonds Built the Modern World.” We spoke on Monday, Aug. 24.
Ezra Klein: Robin Wigglesworth, welcome to the show.
Robin Wigglesworth: Thanks for having me on.
I want to begin with this clip of Donald Trump’s being asked last Friday about Treasury Secretary Scott Bessent’s recent interventions in the bond market.
Archival clip of journalist: Did you direct Bessent to intervene in the bond market? Was that your idea?
Donald Trump: No, not at all. No, he’s a very capable man. He wanted to do it. He’s very good at it. He has a good touch, a very good, natural touch for the bonds and interest. And he did that, yeah.
Journalist: The yields have come back up since then. Have you talked to him about another type of intervention? Is that something he will be doing?
Trump: We have many types of intervention. That’s one. The ultimate intervention is our military, and if we have to use that, we will, yeah.
[Both laugh.]
