US Treasury Yields Surge to 5% Amid Trump's Tariff Fears, Sparking Global Bond Market Turmoil

The U.S. Treasury market experienced a significant selloff on April 9, 2025, with 30-year Treasury yields briefly exceeding 5% due to concerns that President Trump's tariffs could trigger a recession and limit the Federal Reserve's response because of potential inflation. This surge, the largest since November 2023, has raised questions about the stability of U.S. sovereign debt and its impact on borrowing costs. European and Asian stocks also declined, while global bond yields in the U.K., Australia, and Japan rose. Market unease was compounded by a weak three-year debt auction and speculation about foreign selling of U.S. debt. Some analysts suggest hedge fund activity and the unwinding of Treasury positions contributed to the turmoil. Deutsche Bank AG warned of uncharted territory and suggested potential Fed intervention if the disruption continues. The 10-year Treasury yield also increased significantly, reaching levels not seen since late February. These market movements reflect heightened concerns over the economic fallout from Trump's tariffs, which are expected to be borne by U.S. importers and potentially passed on to consumers, leading to increased inflation and undermined growth. Some analysts also pointed to the possibility of China dumping U.S. Treasury holdings in an effort to drive up yields and increase local liquidity. The situation remains volatile, with investors closely monitoring upcoming economic data and any potential policy shifts from the Federal Reserve.