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Why is this market more troubled by rising U.S. interest rates than trade tariffs?

Much like Blanche DuBois in Tennessee Williams’ play “A Street Car Named Desire,” the U.S. has “always depended on the kindness of strangers,” or at least it has for quite a long time. That’s because foreigners have been big buyers of bonds issued by Americans. They’ve helped to finance the U.S. federal budget deficit. They’ve also bought lots of mortgage-backed and corporate bonds.

President Donald Trump’s escalation of the trade war between the U.S. and all our major trading partners has raised concerns that foreigners will respond to Trump’s “America First” protectionism by cutting back on their purchases of U.S. debt.

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