Nomura has cautioned that President Trump's proposal to hand out $5,000 "dividend" checks, coupled with Treasury Secretary Bessent's hands-on approach to the bond market, is chipping away at investor confidence in fixed income.

According to Andrew Ticehurst, a senior rates strategist at Nomura in Sydney, the administration's unorthodox communication style and policy moves are leaving bond investors on edge.

He points out that the market was already fragile due to heavy government debt and a substantial refinancing pipeline, and that conditions have been worsened by a wave of artificial-intelligence-related bond issuance and a spike in global oil prices.

"Then Bessent's intervention to scale up bond buybacks disappointed the market overnight, while Trump's idea of sending $5,000 'dividends' to voters—though unlikely to materialize—could further dent bond investor sentiment," Ticehurst added.

He suggests both Trump and Bessent are likely keeping a close watch on the bond market, noting that Trump is focused on lowering short-term rates, whereas Bessent is aiming to bring down long-term yields.

"We sometimes see Trump shift course after a sharp equity sell-off, so we need to keep an eye on stocks as well as bonds," Ticehurst said.

"Equities have held up fairly well so far, likely supported by the AI theme, but rising bond yields are bad news for the stock market."