US Treasuries sell-off deepens as concern grows | USAEMALL.com

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US Treasuries sold off on Wednesday as President Donald Trump’s tariffs came into effect, deepening investor concern about the “safe haven” status of US sovereign debt.

The yield on the 10-year US Treasury bond jumped as high as 4.51 per cent before settling at 4.42 per cent — up 0.15 percentage points on the day — while the 30-year yield briefly rose above 5 per cent.

The moves offer a fresh challenge to the Trump administration, which had previously cited lowering Treasury yields as a key policy aim and could also mark a loss of investor confidence in the world’s largest sovereign debt market.

“The sell-off may be signalling a regime shift whereby US Treasuries are no longer the global fixed income safe haven,” said Ben Wiltshire, a rates strategist at Citi.

Tuesday’s sell-off is the latest sign of investors moving out of low-risk assets and into cash, as Trump’s tariffs on major trading partners spark intense volatility in markets. Stocks and bonds are often seen to move inversely, but futures indicate US equity markets were poised to sell off on Wednesday alongside US Treasuries. Hedge funds, which are big holders of US Treasuries, were also believed to be selling.

Japan’s government bond market also saw a sharp sell-off, with yields on the 10-year benchmark JGB shooting up 0.11 percentage points to 1.38 per cent, before erasing its losses.

“The stock and bond vigilantes are signalling that the Trump administration may be playing with liquid nitro,” wrote macro strategist Ed Yardeni of Yardeni Research in a note.

“Something may be about to blow up in the capital markets as a result of the stress created by the administration’s trade war.”

The concern around US debt worsened after a US Treasury department auction on Tuesday for three-year notes attracted the weakest demand since 2023.

Poor demand will cast a shadow over upcoming auctions this week, including the sale of $39bn of 10-year notes on Wednesday and $22bn of 30-year bonds on Thursday. 

Some market participants speculated that China and others were liquidating their Treasury holdings. “The market is now concerned about China and other countries ‘dump[ing]’ US treasuries as a retaliation tool. Hence, UST yields up,” said Grace Tam, chief investment adviser for BNP Paribas Wealth Management in Hong Kong.

“In the short term, we expect the bond market to remain volatile given the uncertainty over tariffs, potential negotiations, and potential retaliations.”