Morning from Copenhagen.

There is a clear push for bond yields to come down in the US during the past few days / weeks, and we have seen how officials from the Trump admin – including both Bessent and most recently Elon actively trying to set the direction in USD bond yields. A key remark from yesterday:

“The bond markets do not currently reflect the savings that I’m confident we can achieve,” he said during a freewheeling, hour-long discussion he led on his social media platform, X. “If you’re shorting bonds, I think you’re on the wrong side of the bet.”

While the GOP is normally rhetorically holding its hand under equities more than they do so with bonds, the current administration seems way more fixated on bonds to come down and pay little attention to the dynamics in US equities, where sentiment is clearly souring ahead of both NVIDIA earnings tomorrow and NFP in early March, where early whisper numbers on Bloomberg are calling for a number around 140k (risks are mounting that it will be even lower than that). However, lower bond yields haven’t done much to help equities stay afloat, likely because markets have started to care more about why yields are coming down rather than “if” they are coming down.

The only caveat at the moment is that the progress is yet to be seen across higher frequency metrics such as the daily treasury statements on spending and debt, and our proxy of the daily running fiscal deficit is showing that the deficit continues to grow after a slight hiccup around the inauguration, even with the first layoffs starting to show in claims data for DC – could be why both Bessent and Elon constantly try to move the needle rhetorically on bond yields.

Chart 1a: The Fiscal Deficit Hasn’t Come Down Yet