Donald Trump’s tariffs has sparked a “fire sale” in bond markets, one of the clearest evidence yet that US assets are losing their role as a safe haven for investors.
Despite the growing losses on global stock markets, US government bonds, which have traditionally been regarded as a safe haven for investors during times of crisis, fell on Wednesday.
The move will put pressure on President Trump, who has declared it one of his primary aims to cut yields on bond markets—a benchmark for government borrowing costs.
The US treasury secretary, Scott Bessent, said in February that the president “wants lower rates”, adding “he and I are focused on the 10-year Treasury and what is the yield of that”.
The yield on 30-year Treasuries surged as much as 0.25 percentage points overnight to a level last seen in November 2023.
Bond yields tend to fall when investors race to buy up the assets, which pushes up their price.
Investors usually expect to see bond yields fall during downturns in stock markets as money is moved out of riskier company shares and into the safety of government debt.
But that is not what has happened in recent days, with the rise in yields coming at the same time as the drop in stocks – indicating a loss of confidence in the market.
The 10-year US bond yield – a benchmark for federal government borrowing costs – has surged 41 basis points this week, with the rises impacting the cost of servicing national debt around the world.
The cost of long-term UK government borrowing hit its highest level since 1998 as Mr Trump’s tariffs threatened to destabilise Britain’s public finances.
The 30-year UK gilt yield rose as much as 16 basis points in London to 5.51pc, exceeding highs hit in January when there were concerns that Rachel Reeves would not be able to meet her self-imposed fiscal rules.
The Chancellor said on Tuesday that her promise to get borrowing falling as a percentage of GDP within five years was “non-negotiable”.
