At the start of the year, we didn’t know how Trump policy would shape up. We still don’t. Nor did we know how markets would react. And we still don’t. First markets rallied, then after tariffs were imposed and Liberation Day, everything sold. Then, as President Trump pulled back on tariffs, equities rebounded.

The concern now is shifting to the biggest market of all, the $29 trillion market for U.S. Treasuries. The Treasury market is where macroeconomics and politics meet, in their purest form, and when it begins to wobble, it is a real cause for concern.

Unlike stocks, the Treasury market deals in one asset — U.S. government debt — of various vintages. In the model that most market players have in their heads, on the side of macroeconomics, there is inflation, where a high rate makes bonds less valuable. On the side of politics, there is Congress’s ability (or lack thereof) to balance the budget.

In between macroeconomics and politics stands the Fed with its power to set interest rates and, in extremis, to buy Treasuries en masse. Given the Fed’s ultimate power, it makes little sense to worry about default on U.S. debt. Assuming there isn’t willful interference from the White House or Congress, the bills will always be paid. But if the Fed is printing money to do so, the value of the currency you get paid in, and hence the value of the outstanding pile of $29 trillion in debt, could change drastically.

And that is why we are beginning to see jitters in the Treasury market.

The downgrade of U.S. Treasuries from a perfect AAA score by the ratings firm Moody’s doesn’t help matters. But it reflects market anxiety rather than being a cause of it. Inflation isn’t the big worry right now, either. At below 3 percent, inflation is under control.

The real issue is politics. The market is waking up to the scale of Republican deficits — rising up to 7 percent of gross domestic product from under 6 percent; the party’s complete refusal to consider serious measures to raise revenue; the state of denial, reminiscent of Saddam-era Baghdad, that pervades Trump administration communications around the issue; and what appears to be a concerted effort to dissuade investment of foreign money in America by depreciating the dollar. There is even talk of a tax on foreign capital inflows.