Is the Crisis Over, or Just Beginning?

Blanc
Apr 13
4 min read

Since April 4, the 10-year Treasury yield has jumped from 4.01% to 4.48%.

The Wall Street isn’t worried just because the yield is high — it’s worried because the move defies traditional patterns.

Normally, when markets are in turmoil, investors flock to safe assets like Treasuries, pushing yields lower. Instead, this time, yields are rising. The U.S. dollar is weakening too — which is unusual, because when a country raises tariffs, other countries usually devalue their currencies to offset the cost.

Meanwhile, gold initially dipped on fears tariffs might hit physical shipments. (That’s why New York gold prices briefly surged above London.) and very quickly, gold rebounded.

Put simply:

These are signals suggesting capital is leaving dollar-based assets. This is what gets people nervous and talked about it all weekend.

**10-Year Treasury Note Yield for the Past 30 Days**

Why Does This Matter?

U.S.’s debt have grown rapidly in the past 5 years. From 2019, 107%, to At the end of 2024, National debt to GDP ratio is 124% and hits $35 trillion.

During COVID, the Fed purchased trillions of dollars’ worth of Treasuries. At first, it was an emergency move — stepping in to stabilize the crisis caused by the unwinding of basis trades. But over time, it evolved into full-scale quantitative easing (QE) — pumping trillions of dollars into the system to support the economic recovery. /

The result?

We’ve all seen it: a rapid surge in inflation in the post-COVID years

About one-third of the national debt is held by foreigners. For a long time, the U.S. could run massive trade deficits because the money from the goods trade deficit, always flowed back — into Treasuries, into high P/E stocks, into private equity funds.

But what happens if that cycle starts to reverse?

If foreign buyers pull back from Treasuries, bond prices will keep dropping — and borrowing costs could stay high, even if the Fed cuts rates.

Sure, Congress can raise the debt ceiling. The Fed can print money to buy Treasuries if needed to stabilized the bond yield. But that’s just money printing — and would fuel inflation even further.

Where would the new money go?

If corporations don’t invest the capital they receive into creating jobs — and instead use it for share buybacks and dividends because of economic uncertainty — that money won’t translate into real economic growth.

And without growth, unemployment could rise even higher.

Result? High inflation + rising unemployment = Stagflation.

Am I predicting the future? No.

Just like in 2022, when many economists called for a recession — and we ended up with a soft landing — nothing is certain. I’m simply sharing what the bond and currency markets are signaling right now.

Maybe I’m just reading the tea leaves, but it’s a signal we shouldn’t ignore.

Earnings Season Is Here — and It’s a Mess

JPMorgan kicked things off strong, but Delta and CarMax pulled their earnings guidance altogether.

Even JPM is cautious.

In this environment, it’s hard to trust P/E estimates or valuation models.

I expect earnings forecasts to be more scattered — and overall earnings to come down.

The S&P 500 is still trading at a P/E of 26.8. For reference, we were at 20.8 in Sep 2022, at the dip of the post COVID recovery. Is that sustainable in this environment?

I seriously doubt it.

Time to pull back from meme stocks, speculative names, and anything with sky-high valuations.

So… Will I Still Stay Invested?

Yes! Because I worry about inflation. In a high inflation environment, cash loses value even faster.

If we re-enter a money-printing era,

I’ll stay invested — but diversified across Europe, Asia, gold, currencies, even a little Bitcoin.

Just not all my eggs in one basket.

Can We Find Any Certainty?

Yes, I still believe in the institutions.

The U.S. still has the strongest institutions in the world.
Over 200 years, through wars, depressions, and internal crises, we’ve rebuilt and reinvented ourselves.
Our greatest strength isn’t in short-term policies — it’s in the rule of law, democracy, and resilience.

My Moves

I’m starting to build a small position in gold futures. Capital will still flow into hard assets and equities. Like Howard Marks in his memo published at April 9th, he expects to deploy his newly raised fund faster in this environment to the distressed, but quality assets
Foreign market will become more attractive: MSCI Europe index has P/E 15.53, China Shanghai Stock exchange P/E 14.34, Japan Nikki 225 index,

• I’m keeping my investments slow, careful, and diversified.

• I’m cutting spending to build more savings.

• I’m not chasing 20% returns — my goal is simple: lose as little as possible.