As U.S. Treasury yields spike alongside falling equities and a weakening dollar, investor Chamath Palihapitiya puts the blame squarely on the media and the political establishment.
What Happened: On Wednesday, in a post on X, Palihapitiya, while talking about the rising yields and renewed volatility in the bond markets amid falling equities, said, “The bond market understands what has transpired and it doesn’t like it.”
“Rates are rising, and may now move rapidly,” he said, and while this comes in the lead up to the passing of President Donald Trump’s “One Big, Beautiful Bill,” which offers extensive tax breaks in the face of mounting fiscal deficits, Chamath blames this on journalists and politicians.
He says the recent actions to “sideline DOGE,” or the Department of Government Efficiency, were short-sighted and politically motivated, and argues that those behind the push are now facing an “uncomfortable new reality” as borrowing costs rise.
“Many of the same journos, politicians and media who thought they ‘won’ by trying to sideline DOGE will now face an uncomfortable new reality in their personal financial lives and those of their constituents,” he said. “They will then realize, but never admit, that what they did was reckless.”
Palihapitiya prefaced this post with the phrase “Cutting your nose off to spite your face,” framing this as a cautionary tale against short-sightedness in politics and public policy.
The post drew swift pushback on X, with several prominent users questioning the logic behind blaming the media and journalists.
Among them was Seth Antiles, a macroeconomist, who criticized Palihapitiya’s shifting narrative. “Chamath, remember a few weeks ago when you said the Trump team was orchestrating an economic slowdown to bring down bond yields? You were mistaken then, and you are mistaken now as well,” Antiles said.
Antiles further adds that the Trump administration wasted valuable political capital on the tariffs, when “their priority should have been on deficit reduction.”
Why It Matters: Several prominent experts have criticized Trump’s proposed budget reconciliation bill over the past couple of days.
This includes investor Kevin O’Leary, who expressed concerns regarding part of the bill that pertains to small business tax audits, which he warned could cause “chaos in valuations.”
Macro strategist Craig Shapiro said that the proposed bill would “explode the deficit,” while enriching those in the highest income bracket, at the expense of those in the lowest.
University of Michigan Economist Justin Wolfers referred to it as “pure reverse Robin Hood,” adding that it is “stacked towards the upper end of the upper end of the upper end of the economic food chain.” Wolfers also warned that the budget’s structure could validate the recent downgrading of U.S. Government bonds by Moody’s.
There, however, are a few proponents of the bill, or parts of the bill, with a few supporters. This includes the “No Tax On Tips Act,” which was one of Trump’s key campaign promises, and got the backing of Sen. Ted Cruz (R-Texas), who called the move “political genius.”
Price Action: U.S. 30-Year Treasury yields are now at 5.09%, with the 10-Year Notes now yielding 4.59%.
Photo Courtesy: Kathy Hutchins on Shutterstock.com
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