Bond yields spike as Trump’s tariffs shake global markets.
In a stunning market shift on April 9, 2025, U.S. Treasury yields have spiked sharply—triggering global financial ripples. The 10-year Treasury yield surged by 17 basis points, marking one of the most volatile days in recent memory and sparking comparisons to the COVID-era “dash-for-cash” market panic.
So, what’s behind this sudden selloff?
The main catalyst is former President Donald Trump’s re-imposition of tariffs on Chinese goods, including a whopping 104% duty on certain imports. This aggressive move has rekindled fears of a deepening trade war and ignited fresh uncertainty in global markets.
As a result, yields on longer-term bonds—especially the 20-year and 30-year Treasuries—spiked by 37 basis points in just two days, a rate of movement unseen since the pandemic market crash (Bloomberg, Reuters).
Adding fuel to the fire, hedge funds are now being forced to unwind “basis trades”—a highly leveraged arbitrage strategy involving cash Treasuries and futures contracts. As bond prices tumbled, margin calls triggered mass selling, worsening the yield spike.
“The move is the largest outside of pandemic panic since the 1980s,” analysts warned.
— Reuters
Meanwhile, Treasury Secretary Scott Bessent has been trying to calm the market by signaling rate stability. However, the efforts seem to be falling flat amid inflationary fears, growing debt concerns, and waning foreign investor confidence in U.S. fiscal policy (Reuters).
This latest Treasury rout has not only rattled Wall Street but also reinvigorated fears of liquidity crunches, especially among institutional investors managing leveraged portfolios.
In short, investors should brace for more turbulence in the bond markets as geopolitical tensions collide with economic uncertainty.
Leave a Reply