{"id":541584,"date":"2026-01-25T10:31:14","date_gmt":"2026-01-25T10:31:14","guid":{"rendered":"https:\/\/www.europesays.com\/us\/541584\/"},"modified":"2026-01-25T10:31:14","modified_gmt":"2026-01-25T10:31:14","slug":"trump-ditches-plan-to-take-over-greenland-amid-state-of-us-bond-market","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/541584\/","title":{"rendered":"Trump ditches plan to take over Greenland amid state of US bond market"},"content":{"rendered":"

Don\u00adald Trump<\/a> this past week abruptly ditched his plan to invade Greenland<\/a> \u2014 and the head-spinning about-face came thanks to the US bond market.<\/p>\n

Yes, you read that right: It wasn\u2019t diplomacy, and it wasn\u2019t backroom deals among bigwigs inside some posh chalet here at the World Economic Forum<\/a>. <\/p>\n

Instead, it was the bond market that solved the Greenland crisis, IMHO and in the opinion of my Wall Street sources, persuading the president to settle for a \u201cframework\u201d that merely puts a few more US military bases on the ice-covered island.<\/p>\n

I know what you\u2019re thinking: I\u2019ve jumped the shark on this one, so caught up in my fixation on \u00adfinance that I can\u2019t see the broader geopolitical forces that made it impossible for our president to send in the Navy SEALs to seize all that strategically positioned tundra.<\/p>\n

True, Trump upset the world when he said he sees Greenland as a piece of the US and aimed to make it happen by any means necessary. <\/p>\n

While the island is inhospitable and barely inhabited, it\u2019s also a territory of Denmark, a country that is a NATO member. <\/p>\n

\t\t\tMore From\t\t\t\t\t\t\tCharles Gasparino<\/p>\n

That means we have a treaty \u2014 ratified by Congress \u2014 not to mess with it.<\/p>\n

All of which just proves my point. <\/p>\n

While The Donald was blowing smoke about sending in troops, he more seriously brandished his preferred weapon of coercion \u2014 massive tariffs \u2014 on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland. <\/p>\n

They would either hand him Greenland or face an additional 10% tariff rate on their goods, later ramping up to 25%.<\/p>\n

Europe went nuts \u2014 but so did the US bond market, with yields spiking and prices falling. <\/p>\n

Stocks sold off, too, but their declines can be traced to the more serious tanking of bonds, spurred by the prospect of inflation caused by tariffs.<\/p>\n

Strong signal<\/p>\n

When bond prices fall and interest rates rise, that\u2019s a strong signal that bad things are coming for the economy. <\/p>\n

Higher rates mean higher borrowing costs for consumers, who in turn cut back on consumption. It also means we need to pay more money to finance our massive budget deficit.<\/p>\n

We\u2019ve seen this movie before. <\/p>\n

Remember those onerous \u201cLiberation Day\u201d tariffs? <\/p>\n

\t\t\t\t\t\t\tCharlie Gasparino has his finger on the pulse of where business, politics and finance meet\t\t\t\t\t\t<\/p>\n

\n\t\t\t\t\t\t\tSign up to receive On The Money by Charlie Gasparino in your inbox every Thursday.\t\t\t\t\t\t<\/p>\n

\t\t\t\t\t\tThanks for signing up!\n\t\t\t\t<\/p>\n

The reason they never destroyed the economy as many predicted can be traced to a massive sell-off in bonds.<\/p>\n

Recall that the minute Liberation Day was announced, Treasury Secretary Scott Bessent<\/a> faced all of the above. <\/p>\n

The yield on the all-important 10-year Treasury bond skyrocketed, heading to 5% \u2014 a dangerous level that signals a steep recession even with Trump\u2019s big plans for tax cuts and deregulation.<\/p>\n

Traders, so-called bond vigilantes, kept selling until Bessent \u00adannounced the whole exercise of \u201cliberation\u201d was on hold.<\/p>\n

In fact, bond prices didn\u2019t stop tumbling until Bessent began to cut trade deals with the world including our arch-nemesis China, taking tariffs to much lower levels. <\/p>\n

The markets then resumed their upward trajectory, put in motion by the president\u2019s deregulation and tax cutting.<\/p>\n

We didn\u2019t have quite the same scenario when Trump announced his Greenland tariff scheme, but it was starting to head in that direction. The 10-year note spiked to above 4.3% and stocks sold off, and hard.<\/p>\n

Exit ramp<\/p>\n

That is, until Trump on Wednesday announced here at Davos<\/a> that he had a new deal, his Greenland \u201cframework,\u201d or exit ramp \u2014 where he appears to have gotten nothing really new since Denmark has been largely compliant about letting the US military set up shop on its turf.<\/p>\n

Markets didn\u2019t care \u2014 in fact, they celebrated. <\/p>\n

Bonds recovered, as did stocks. <\/p>\n

In other words, the vigilantes struck again.<\/p>\n

Former President Bill Clinton famously summed up the power of the bond markets years ago, back in the early 1990s, when he was told by one of his economic advisers that he needed to raise taxes for deficit reduction or bonds would collapse and interest rates rise. <\/p>\n

He was flirting with recession.<\/p>\n

His exact words to Robert Rubin, as reported by journalist Bob Woodward (which I later confirmed with Rubin, then the National Economic Council chief) went like this: \u201cYou mean to tell me that the success of my program and my re-election hinges on the Federal Reserve and a bunch of f\u2013king bond traders?\u201d<\/p>\n

Rubin said yeah. <\/p>\n

Now, those f\u2013king traders are even more important to Trump and Bessent. <\/p>\n

The debt and deficits of the Clinton years were minuscule compared to what we have now: Annual budget shortfalls of close to $2 trillion. <\/p>\n

Our debt is at $38 trillion, a whopping 125% of economic output.<\/p>\n

And that is how a bunch of \u00ad\u201cf\u2013king bond traders\u201d \u2014 not a huddle of power players in Davos \u2014 solved the Greenland crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"Don\u00adald Trump this past week abruptly ditched his plan to invade Greenland \u2014 and the head-spinning about-face came…\n","protected":false},"author":3,"featured_media":541585,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7096,64,69,8298,8959,18244,2175,67,132,68],"class_list":{"0":"post-541584","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bill-clinton","9":"tag-business","10":"tag-donald-trump","11":"tag-greenland","12":"tag-nato","13":"tag-scott-bessent","14":"tag-tariffs","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115955281740276355","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/541584","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=541584"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/541584\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/541585"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=541584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=541584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=541584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}