Investors are
liquidating assets in a dash for cash as US President Donald Trump's
tariff war upends expectations for growth and spending around the world
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Bond Markets Crater Amid Dash for Cash on Tariff Fears
The exodus from longer-dated US Treasuries accelerated, fueling the biggest selloff since 2020 in what are supposed to be the world’s safest assets.
The
yield on 30-year Treasuries briefly soared above 5% with investors
increasingly worried President Donald Trump’s tariffs, which kicked into
effect today, will send the economy into recession and limit the
Federal Reserve’s ability to respond by also igniting inflation. While
the selling eased into the European trading day, speculation continued
to swirl about the reasons investors were turning their backs on US
sovereign debt.
The
United States will take back the Panama Canal from Chinese influence,
US Defence Secretary Pete Hegseth said on Tuesday during a visit to the
Central American nation.
Hegseth,
following talks with Panama’s government, vowed to deepen cooperation
and said China would not be allowed to “weaponize” the canal by using
Chinese firms’ commercial relationships for espionage.
“Together, we will take back the Panama Canal from China’s influence,” Hegseth said.
“China-based companies continue to control critical infrastructure in the canal area,” Hegseth said.
“That
gives China the potential to conduct surveillance activities across
Panama. This makes Panama and the United States less secure, less
prosperous and less sovereign. And as President Donald Trump has pointed
out, that situation is not acceptable.”
Panama’s
President José Raúl Mulino (left) holds a meeting with US Secretary of
Defence Pete Hegseth at Las Garzas Presidential Palace in Panama City on
Tuesday. Photo: Panamanian Presidency via AFP
Hegseth
met with Mulino for two hours Tuesday morning before heading to the
Vasco Nunez de Balboa Naval Base, which had previously been the US
Rodman Naval Station.
On the way, Hegseth posted a photo of the two men laughing to social media and wrote that it was an honour speaking with Mulino.
“You
and your country’s hard work is making a difference. Increased security
cooperation will make both our nations safer, stronger and more
prosperous,” he wrote.
The
visit comes amid tensions over Trump’s repeated assertions that the
United States is being overcharged to use the Panama Canal and that
China has influence over its operations. Panama has denied those
allegations.
After
Hegseth and Mulino spoke by phone in February, the US State Department
published on social media that an agreement had been reached to not
charge US warships to pass through the canal. Mulino publicly denied
there was any such deal.
Trump
has gone so far as to suggest the US never should have turned the canal
over to Panama and that maybe Washington should take it back.
The
China concern was provoked by the Hong Kong consortium holding a
25-year lease on ports at either end of the canal. The Panamanian
government announced that lease was being audited and late Monday
concluded that there were irregularities.
The
Hong Kong consortium, however, had already announced that CK Hutchison
would be selling its controlling stake in the ports to a consortium
including BlackRock Inc., effectively putting the ports under American
control once the sale is complete.
Rubio
told Mulino during his visit that Trump believed that China’s presence
in the canal area may violate a treaty that led the United States to
turn the waterway over to Panama in 1999. That treaty calls for the
permanent neutrality of the American-built canal.
Riot
police stand next to a US flag left by demonstrators in Panama City
during a protest against US Secretary of Defence Pete Hegseth’s visit on
Thursday. Photo: AFP
Mulino
has denied that China has any influence in the operations of the canal.
In February, he expressed frustration at the persistence of the
narrative.
“We aren’t going to speak about what is not reality, but rather those issues that interest both countries.”
The
United States built the canal in the early 1900s as it looked for ways
to facilitate the transit of commercial and military vessels between its
coasts.
Washington relinquished control of the waterway to Panama on
December 31, 1999, under a treaty signed in 1977 by President Jimmy
Carter.
“I want to be very clear, China did not build this canal,” Hegseth said on Tuesday.
“China
does not operate this canal and China will not weaponise this canal.
Together with Panama in the lead, we will keep the canal secure and
available for all nations through the deterrent power of the strongest,
most effective and most lethal fighting force in the world.”
