 "Trump tariff impact: ‘US Treasuries are no longer the global fixed-income safe haven’")
Global market turmoil escalated on Wednesday after the implementation of US President Donald Trump’s extensive tariffs, leading to significant sell-offs in both government bonds and stocks.
According to a Financial Times report, citing analysts, the US Treasuries are no longer the global fixed-income safe haven, as the sell-off in these traditionally safe assets signals heightened investor concern.
US Treasuries were hit hard, with the 10-year yield, a key benchmark for global borrowing costs, soaring to 4.51% before settling at 4.4%, marking a rise of 0.14 percentage points for the day, up from below 3.9% on Monday.
The yield on 10-year Japanese government bonds also surged to 1.37% before easing back to 1.27%, showing little change overall, added the report.
As bond prices fell, stock markets faced renewed pressure. The Stoxx Europe 600 index dropped 3.6% before reducing its losses to 3.2%. The FTSE 100 and Germany’s DAX both declined by 2.9%, also paring earlier losses.
Futures for the S&P 500 and Nasdaq 100 fell nearly 3% earlier in the session but later stabilized around flat.
Ed Yardeni of Yardeni Associates told The Financial Times that the sell-off in Treasuries, typically a haven for investors during periods of market stress, was signalling that the “Trump administration may be playing with liquid nitro”.
Economists and investors are warning that Trump’s tariffs could heighten the risk of a recession in the US and trigger a new wave of inflation.
As market participants adjusted their expectations for slower global growth, oil prices continued to slide, with Brent crude futures dropping below $60 per barrel for the first time since February 2021.
The dollar weakened by 0.7% against a basket of major currencies, while Japan’s yen initially rose 1.5% against the dollar before losing some of its gains.
Impact Shorts
More ShortsYields on longer-term bonds also increased, with the 30-year Treasury yield briefly surpassing 5%, up from 4.71% at Tuesday’s close. The yield on 30-year UK government debt climbed to 5.5%, its highest level since July 1998.
“The sell-off may be signalling a regime shift whereby US Treasuries are no longer the global fixed-income safe haven,” The Financial Times quoted Ben Wiltshire, a G10 rates strategist at Citi, as saying.
Asian equities sold off. China’s CSI 300 was the only index trading higher amid signs that Beijing was stepping in to support the market.
With inputs from agencies
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