Bond rout deepens as tariffs take effect
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The news: A US Treasury selloff extended into a global bond market slump on Wednesday as US President Donald Trump’s tariffs took effect.
The numbers: The 10-year US Treasury yield climbed to 4.51% before dropping back to 4.37%, up 0.11 percentage points on the day. The 10-year yield has risen from under 3.9% earlier this week. The 30-year yield briefly rose over 5%.
Yields in the UK and Japan climbed sharply as the moves pushed government borrowing costs up. British 30-year government bond yields surged to their highest since 1998, reaching over 5.5%, up 16 basis points on the day and past January’s previous high of 5.4%.
European stocks also came under pressure, with the Stoxx 600 Europe falling 6.2% and the FTSE 100 down 2.2%. Germany’s Dax fell 2.4%.
Every sector in Europe was down at market open, with drugmakers taking the biggest hit as investors await a “major tariff on pharmaceuticals” expected to be announced very shortly. The Stoxx 600 Health Care Index fell off as much as 4.7%, its lowest since October 2022.
The context: Investors are scrambling to liquidate assets as the US tariffs upend expectations for growth and spending the world over. “The sell-off may be signalling a regime shift whereby US Treasuries are no longer the global fixed-income safe haven,” Ben Wiltshire, a G10 rates strategist at Citi told the Financial Times.
The sources: Financial Times, Bloomberg, Reuters
