Is The Safest Investment Turning Risky?

📆This Week’s Topic

This week, I want to talk about the markets and the new risk from Trump’s trade war. The markets have been down for the past couple of weeks as Trump announced that he was implementing tariffs on a lot of countries. I discussed what happened two weeks ago in a Previous Article. 

🚩 Intro

There is nothing that is ever certain in the world of investments and money. There are specific good investments and specific bad investments at different time frames and circumstances. However, U.S. Treasury Bonds are considered a very safe investment with little to no risk. 2 weeks ago, when Trump initially started to implement various tariffs on a lot of countries, these investors were having second thoughts on investments in US Government Bonds. They were having second thoughts because they thought Trump’s Tariffs would cause a major trade war, and they thought that this could dismantle the government. They were also thinking about whether the government would be in huge trouble if these tariffs stay intact.

💳 Cause & Effect

When Trump announced these tariffs, he showed that his actions were able to do severe damage to the country and global markets. The trade war, which is now focused mainly on China, is making extreme attempts to cause a major decrease in the US Government’s credibility. This could potentially cause the government’s structure to shake and tumble. We don’t know this for sure yet, but at this rate is getting more likely.

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🏦The Bonds

The US government bond market is active for the singular reason that the government can issue them. Investors can cling to bonds in times of panic and government distress, the government can manage to take control of the debts and therefore make the bonds safe. With the upcoming trade war, this certainty is no longer complete. If the government gets dismantled, the government bonds will not survive as a safe investment or as an investment at all.

📊 Statistics

The average 10-year government bond, which is pretty closely watched by analysts, dropped from 4.5% to below 4%. This happened in the radius of one week. This is a huge drop for what most would call a safe investment. Other elements from the bond decrease include hedge funds deciding what to do in the future and predicting their next move.

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⛱ Consumer Effect

The consumers who have financial stakes in US government bonds are going to be sold. The problem is that no one wants to buy these bonds because the US government has not been making the best decisions for its country. This will make those consumers lose a lot of money, and these bonds will no longer be considered a safe and risk-free investment.

🏢Government Effect

Also, the Federal Government relies on bonds for its income. A lot of investors invest in government bonds as they are usually considered safe investments. If the US does not manage its debt correctly, the bonds may not be paid on time or at all. It could affect a lot of Americans who rely on bonds as their safe investment.

⏳ Final Snippet

In summary, with the new trade war that is happening in the US right now, no investment is fully secure. Some investments are better for the portfolio and worse for the portfolio, but the best idea is to diversify your investments so that if one market falls, it does not affect your entire investment portfolio. These are tough times for the market, and I hope you can find some faith that eventually the market will go back up. Nothing is for sure quite yet, but just keep this article in mind while investing.

🙏Thank You & Important Information

Anyway, thank you so much for reading this edition of Friday Finance. I appreciate how many loyal subscribers I have. I recently changed my website url to fridayfinancedc.com for easier use. I am also in the process of creating a podcast for Friday Finance featuring the articles in audio format, I will probably have it set up by next week’s article. Also, I am publishing a brand new referral program to get shop items for free, Link below! Anyway, have a great week, and I will see you next week.

Jacob Gans

Friday Finance