1Q2025 update

Just a quick update on my previous idea linked below. The US 10-year yield has come off and completed a 4th wave lower onto the 50-day MA of 4.83%. If this support and the current upward channel holds its ground, I expect a 5th wave higher to rip yields toward the 5% level.

A break below the blue support range between 4.45% and 4.5% will however invalidate the move and allow yields to ease towards 4.20%.

President Trump has to somehow create demand for the US treasuries and a persistent inflation environment forces investors to demand a higher yield on their treasuries. I believe Trump will create this US treasury demand by sucking dollars back into the US via his trade tariffs and suspension of foreign aid to other countries (essentially allowing the dollar milkshake theory to playout). The dollar may however get too strong for Trump's likening since a stronger dollar makes goods from the US more expensive while making foreign goods cheaper for the US which will only further exacerbate the US trade deficit.

Trump essentially needs a weaker dollar to turn the US into an exporting manufacturing country, "making America great again" but I see the effect of his policies being dollar positive?
Perhaps Trump will negotiate a Plaza accord 2.0 to systematically devalue the dollar...

Additionally, attached in the comments is the progress that the Fed has made on its balance sheet taper. So far so good, neither the US bond nor repo market hasn't crashed het like it did in September 2019 but another rip higher in US long dated treasuries might just be the spark that lights the kerosene-soaked rug which will force the Fed to step back into the bond market.