Billed on Wall Street as so rock-solid safe they’re risk-free, US Treasury bonds have long served as first port of call for investors during times of panic. They rallied during the global financial crisis, on 9/11 and even when America’s own credit rating was cut.
But now, as President Donald Trump unleashes an all-out assault on global trade, their status as the world’s safe haven is increasingly coming into question.
Yields, especially on longer-term debt, have surged in recent days while the dollar has plunged. Even more disconcerting is the pattern of the recent market moves. Investors have often dumped 10- and 30-year Treasuries — pushing prices down and yields up — at the very same time they frantically sold stocks, crypto and other risky assets. The inverse is also true, with Treasuries rallying in unison with them.
Treasuries Are Trading Like Risky Assets in Warning to Trump
The U.S. dollar slumped further Friday, falling to an almost two-year low, on weakening confidence in the American economy as the trade war between the two largest economies in the world escalated, with China once more raising the tariffs on U.S. goods.
At 04:20 ET (08:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 1.2% to 99.430, falling below the 100 level for the first time since July 2023.
Dollar Slumps On Escalating Sino-U.S. Trade War
This week's selloff in US debt has been historic, with 30yr yields poised for a +48bps weekly increase, which would be their largest since the 1980s: Jim Reid at Deutsche Bank
