This is the term used periodically to describe investors who push back against what are perceived to be irresponsible fiscal or monetary policies by selling government bonds, in the process pushing up yields, or implied borrowing costs.
Most of the focus on markets in the wake of Donald Trump’s imposition of tariffs on the rest of the world has, in the last week, been about the calamitous stock market reaction.
This was previously something that was assumed to have been taken seriously by Mr Trump.
During his first term in the White House, the president took the strength of US equities – in particular the S&P 500 – as being a barometer of the success, or otherwise, of his administration.
Image: Donald Trump in the Oval Office today. Pic: Reuters
He had, over the last week, brushed off the sour equity market reaction to his tariffs as being akin to “medicine” that had to be taken to rectify what he perceived as harmful trade imbalances around the world.
But, as ever, it is the bond markets that have forced Mr Trump to blink – and, make no mistake, blink is what he has done.
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To begin with, following the imposition of his tariffs – which were justified by some cockamamie mathematics and a spurious equation complete with Greek characters – bond prices rose as equities sold off.
That was not unusual: big sell-offs in equities, such as those seen in 1987 and in 2008, tend to be accompanied by rallies in bonds.
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What it’s like on the New York stock exchange floor
However, this week has seen something altogether different, with equities continuing to crater and US government bonds following suit.
At the beginning of the week yields on 10-year US Treasury bonds, traditionally seen as the safest of safe haven investments, were at 4.00%.
By early yesterday, they had risen to 4.51%, a huge jump by the standards of most investors. This is important.
The 10-year yield helps determine the interest rate on a whole clutch of financial products important to ordinary Americans, including mortgages, car loans and credit card borrowing.
By pushing up the yield on such a security, the bond investors were doing their stuff. It is not over-egging things to say that this was something akin to what Liz Truss and Kwasi Kwarteng experienced when the latter unveiled his mini-budget in October 2022.
And, as with the aftermath to that event, the violent reaction in bonds was caused by forced selling.
Now part of the selling appears to have been down to investors concluding, probably rightly, that Mr Trump’s tariffs would inject a big dose of inflation into the US economy – and inflation is the enemy of all bond investors.
Part of it appears to be due to the fact the US Treasury had on Tuesday suffered the weakest demand in nearly 18 months for $58bn worth of three-year bonds that it was trying to sell.
But in this particular case, the selling appears to have been primarily due to investors, chiefly hedge funds, unwinding what are known as ‘basis trades’ – in simple terms a strategy used to profit from the difference between a bond priced at, say, $100 and a futures contract for that same bond priced at, say, $105.
In ordinary circumstances, a hedge fund might buy the bond at $100 and sell the futures contract at $105 and make a profit when the two prices converge, in what is normally a relatively risk-free trade.
So risk-free, in fact, that hedge funds will ‘leverage’ – or borrow heavily – themselves to maximise potential returns.
The sudden and violent fall in US Treasuries this week reflected the fact that hedge funds were having to close those trades by selling Treasuries.
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Trump freezes tariffs at 10% – except China
Confronted by a potential hike in borrowing costs for millions of American homeowners, consumers and businesses, the White House has decided to rein back its tariffs, rightly so.
It was immediately rewarded by a spectacular rally in equity markets – the Nasdaq enjoyed its second-best-ever day, and its best since 2001, while the S&P 500 enjoyed its third-best session since World War Two – and by a rally in US Treasuries.
The influential Wall Street investment bank Goldman Sachs immediately trimmed its forecast of the probability of a US recession this year from 65% to 45%.
Of course, Mr Trump will not admit he has blinked, claiming last night some investors had got “a little bit yippy, a little bit afraid”.
And it is perfectly possible that markets face more volatile days ahead: the spectre of Mr Trump’s tariffs being reinstated 90 days from now still looms and a full-blown trade war between the US and China is now raging.
But Mr Trump has blinked. The bond vigilantes have brought him to heel. This president, who by his aggressive use of emergency executive powers had appeared to be more powerful than any of his predecessors, will never seem quite so powerful again.
Sean “Diddy” Combs’s public persona was that of a “charismatic” hip-hop mogul – but behind the scenes he forced women into “freak off” sexual encounters with escorts and blackmailed them with videos, prosecutors alleged during the first day of his trial.
In the courtroom in Manhattan, New York, Combs blew a kiss to his mother and family members supporting him, before listening intently as opening statements from the prosecution and defence outlined the details of the high-profile case.
The hip-hop mogul, 55, has pleaded not guilty to charges of sex trafficking, racketeering conspiracy and transportation to engage in prostitution, and strenuously denied all allegations of sexual abuse.
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Sean Combs’s family arrive at court
His defence lawyers say all sexual encounters were consensual and that the case is really about nothing more than Combs’s sexual preferences, which they say should remain private. Combs is a “flawed individual”, they argue, but not a racketeer or a sex trafficker.
The court also heard evidence from two witnesses – a former hotel security guard and a male escort.
But first, prosecutor Emily Johnson gave her opening statement.
“To the public, he was Puff Daddy or Diddy,” she told the court, describing Combs as a “business icon” and “larger than life”.
However, there was another side to the rapper, she says – a side that “ran a criminal enterprise”, she said. He sometimes “called himself the king”, Ms Johnson said, and expected to be treated like one.
“This is Sean Combs,” Ms Johnson told jurors as she pointed at Combs, who leaned back in his chair. “During this trial you are going to hear about 20 years of the defendant’s crimes.”
Those crimes, she said, included kidnapping, arson, drugs, sex crimes, bribery and obstruction.
Image: There are no cameras in the court building, so court artists capture the scenes inside. Sketch: Reuters/Jane Rosenberg
Ms Johnson said Combs beat and sexually exploited his former long-term girlfriend Cassie, who was named in court, and compelled the singer and other women to take drugs and have sex with male escorts.
He threatened to ruin Cassie’s career by publicly releasing videos of these sexual encounters, which were dubbed “freak offs”, jurors heard.
“Her livelihood depended on keeping him happy,” the prosecutor said.
Jurors will hear testimonies from alleged victims who will talk about “some of the most painful experiences of their lives”, Ms Johnson continued. “The days they spent in hotel rooms, high on drugs, dressed in costumes to perform the defendant’s sexual fantasies.”
Image: Combs and Cassie pictured in 2017. Pic: zz/XPX/STAR MAX/IPx 2017/AP
‘This is not a complicated case’
But Teny Geragos, who is on Combs’s defence team, painted a very different picture.
“Sean Combs is a complicated man,” she told the court. “But this is not a complicated case. This case is about love, jealousy, infidelity and money.”
Ms Geragos conceded that Combs could be violent and said she understood some jurors might not condone this, nor his “kinky sex”. But the rapper is “not charged with being mean”, she said, and his lifestyle may have been indulgent, but it was not illegal.
She also claimed Combs’s accusers were motivated by money.
Cassie hotel footage shown in court
Image: Pic: CNN via AP May 2024
After the opening statements, the first witness, Israel Florez, was called to the stand.
Now a police officer in LA, in March 2016, Mr Florez worked as a security guard at a hotel in Los Angeles, where Combs was filmed on CCTV seemingly attacking R&B singer and model Cassie, whose full name is Casandra Ventura.
After CNN aired video of the attack last year, the rapper apologised in a video on social media and said he was “disgusted” by his actions.
Video footage of this incident was shown in court as Mr Florez gave his testimony.
He told the court he recognised Combs after responding to a call of a woman in distress on the sixth floor of the hotel. The rapper was wearing only a towel and socks, Mr Florez told the court, and had “a blank stare, like a devilish stare, just looking at me”.
He said that as he was escorting Ms Ventura and Combs to their room, she indicated she wanted to leave and the rapper told her: “You’re not going to leave.”
Combs then offered him money and told him “don’t tell nobody”, Mr Florez said.
The second witness, Daniel Phillip, used to work as a male escort, the court was told. He said he met Ms Ventura at a hotel in Manhattan, where he thought he was attending a bachelorette party.
However, he said he ended up having sex with Ms Ventura as Combs watched and masturbated, and that he was paid several thousand dollars.
Mr Phillip said he had several subsequent encounters with the then couple, which lasted between an hour and 10 hours, and that he witnessed or heard the rapper being violent on two occasions.
He told the court he did not intervene as Combs was powerful, and that he feared for his life. His evidence will continue tomorrow.
The trial is expected to last about eight weeks. Combs faces up to life in prison if he is convicted.
Hamas has released Edan Alexander, an Israeli soldier who holds American citizenship, as part of ongoing efforts to achieve a permanent ceasefire with Israel.
The 21-year-old was believed to be the last living American hostage in Gaza.
In a statement, Hamas said: ” The Izz ad-Din al-Qassam Brigades released the captured Israeli soldier, Idan Alexander, a US citizen, a short while ago, following contacts with the US administration. This comes as part of the efforts being made by mediators to achieve a ceasefire, open the crossings, and allow aid and relief to reach our people in the Gaza Strip.
Image: Edan Alexander. Pic: Hostages and Missing Families Forum via AP
“This step comes after important contacts in which Hamas demonstrated positivity and high flexibility.
“We affirm that serious and responsible negotiations achieve results in the release of prisoners. However, continuing the aggression prolongs their suffering and may kill them.
“We affirm the movement’s readiness to immediately begin negotiations to reach a comprehensive and sustainable ceasefire agreement, including the withdrawal of the occupation army, the end of the siege, a prisoner exchange, and the reconstruction of the Gaza Strip.
“We urge the Trump administration to continue its efforts to end this brutal war waged by the war criminal Netanyahu against children, women, and defenceless civilians in the Gaza Strip.”
Mr Alexander was transferred to Israel Defence Forces via the Red Cross.
Image: A sign outside a Jewish community centre in Edan Alexander’s home town of Tenafly, New Jersey. File pic: Reuters
An IDF statement said: “The returning hostage is currently being accompanied by IDF special forces on his return to Israeli territory, where he will undergo an initial medical assessment and meet with his family.
“The commanders and soldiers of the Israel Defense Forces salute and embrace the returning hostage as he makes his way home to the State of Israel.
“The IDF Spokesperson’s Unit asks everyone to respect the privacy of the returning hostage and his family.”
Mr Alexander’s parents, who live in the US, made the journey to Israel ahead of the expected release.
The family said they were deeply grateful to US President Donald Trump and his administration for its work to secure the release – and have urged the Israeli government to continue efforts to free all hostages.
Mr Alexander, who is from New Jersey, was 19 when he was taken from his base on the border with Gaza in southern Israel during the Hamas attacks on 7 October 2023.
It has been an extraordinary few hours which may well set the tone for a hugely consequential week ahead.
In the time that it took me to fly from London to Saudi Arabia, where President Donald Trump will begin a pivotal Middle East tour this week, a flurry of news has emerged on a range of key global challenges.
• On the Ukraine war: President Volodymyr Zelenskyy has said he is prepared to meet Russian President Vladimir Putin in Istanbul – this announcement came minutes after Trump urged Zelenskyy to agree to the meeting.
• On the China-US trade war: The White House says the two countries have agreed to a “trade deal”. China said the talks, in Geneva, were “candid, in-depth and constructive”.
All three of these developments represent dramatic shifts in three separate challenges and hint at the remarkable influence the US president is having globally.
This sets the ground for what could be a truly consequential week for Trump’s presidency and his ability to effect change.
On Ukraine, Putin held a late-night news conference at the Kremlin on Saturday at which he made the surprise proposal of talks with Zelenskyy in Istanbul this Thursday.
But he rejected European and US calls for an immediate ceasefire.
The move was widely interpreted as a delay tactic.
Trump then issued a social media post urging Zelenskyy to accept the Russian proposal; effectively to call Putin’s bluff.
The American president wrote: “President Putin of Russia doesn’t want to have a Cease Fire Agreement with Ukraine, but rather wants to meet on Thursday, in Turkey, to negotiate a possible end to the BLOODBATH. Ukraine should agree to this, IMMEDIATELY. At least they will be able to determine whether or not a deal is possible, and if it is not, European leaders, and the U.S., will know where everything stands, and can proceed accordingly! I’m starting to doubt that Ukraine will make a deal with Putin, who’s too busy celebrating the Victory of World War ll, which could not have been won (not even close!) without the United States of America. HAVE THE MEETING, NOW!!!”
“We await a full and lasting ceasefire, starting from tomorrow, to provide the necessary basis for diplomacy. There is no point in prolonging the killings. And I will be waiting for Putin in Türkiye on Thursday. Personally. I hope that this time the Russians will not look for excuses,” Zelenskyy wrote on X.
The prospect of Putin and Zelenskyy together in Istanbul on Thursday is remarkable.
It raises the possibility that Trump would want to be there too.
Image: President Volodymyr Zelenskyy welcomes other world leaders to Kyiv. Pic: Presidential Office of Ukraine/dpa/AP Images
Israel’s war in Gaza
On Gaza, it’s been announced that US envoy Steve Witkoff will arrive in Israel on Monday to finalise details for the release of Idan Alexander, an Israeli-American hostage being held by Hamas.
The development comes after it was confirmed that Mr Witkoff has been holding discussions with Israel, Qatar and Egypt and, through them, with Hamas.
The talks focused on a possible Gaza hostage deal and larger peace discussions for a ceasefire.
Meanwhile, officials from the United States and China have been holding talks in Geneva, Switzerland, to resolve their trade war, which was instigated by Trump’s tariffs against China.
Late on Sunday evening, the White House released a statement claiming that a trade deal had been struck.
In a written statement, titled “U.S. Announces China Trade Deal in Geneva”, treasury secretary Scott Bessent said: “I’m happy to report that we made substantial progress between the United States and China in the very important trade talks… We will be giving details tomorrow, but I can tell you that the talks were productive. We had the vice premier, two vice ministers, who were integrally involved, Ambassador Jamieson, and myself. And I spoke to President Trump, as did Ambassador Jamieson, last night, and he is fully informed of what is going on. So, there will be a complete briefing tomorrow morning.”
Beijing Global Times newspaper quoted the Chinese vice premier as saying that the talks were candid, in-depth and constructive.
However, the Chinese fell short of calling it a trade deal.
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In a separate development, US media reports say that Qatar is preparing to gift Trump a Boeing 747 from its royal fleet, which he would use as a replacement for the existing and aging Air Force One plane.
The Qatari government says no deal has been finalised, but the development is already causing controversy because of the optics of accepting gifts of this value.