Treasury bonds

The "Sell America" trade that gripped markets this month has left a potentially lasting dent in investors' willingness to hold the US government's longest-maturity debt, a mainstay of its deficit-financing toolkit.

Long-maturity Treasury yields tumbled Wednesday as part of a broader rally in dollar-denominated risk assets, after US President Donald Trump said he wasn't inclined to fire the head of the Federal Reserve and suggested tariffs on Chinese imports could drop.

The US bond market is starting to get some relief, with long-maturity yields falling on Wednesday after Trump indicated a willingness to strike a trade deal with China.

Moody's Corp., a company that grades bonds and analyzes corporations' financial performance, said it expects to earn less this year than it had previously forecast.

In a sign of how Treasuries' status as a global haven during times of turmoil may be fading, rates on longer-term debt soared last week as equities convulsed, turbocharging bets on a steeper yield curve.

President Donald Trump unleashes an all-out assault on global trade, the status of Treasury bonds as the world's safe haven is increasingly coming into question.

Pres. Trump's decision to pause most of the tariffs has sparked a rally in the stock market, but the 10-year yield, while off of its peak, remains higher.

A pullback from US Treasuries sent longer-term yields surging by the most since pandemic struck in 2020, deepening losses in what's supposed to be a haven from financial turmoil and roiling markets abroad as investors sell government bonds to raise cash.

Treasuries surged and investors boosted their bets on Federal Reserve interest-rate cuts Monday as fear of a economic slowdown took hold across US markets.

The advances pushed the yield on three- to 10-year yields lower by 10 basis points on Monday, with the moves accelerating as US equities sold off.

Traders added to bets on interest-rate cuts from the Federal Reserve amid concern about the impact of US trade tariffs on global economic growth. 

"Red flags are emerging for the US economy," said Elias Haddad, senior market strategist at Brown Brothers Harriman. "Another month or two of poor US economic data would deliver a blow to the US exceptionalism narrative."

Bond traders anticipate that yields will remain elevated — and range bound — until there's a lot more clarity on where the economy is heading. 

Treasury Secretary Scott Bessent said the Trump administration's focus with regard to bringing down borrowing costs is 10-year Treasury yields, rather than the Federal Reserve's benchmark short-term interest rate.

After repeatedly blasting Janet Yellen last year over her department's strategy for issuing federal debt, it's now up to Scott Bessent to make the call on sales of Treasuries, with bond dealers conflicted over what he'll do in a pivotal release due Wednesday.

For those unsettled by the relentless rise in government bond yields in the US and across much of the world lately, the message from markets is getting clearer by the day: Get used to it.

In the US, the 10-year Treasury yield rose as high as 4.73% Wednesday, pushing it toward the 5% peak hit in October 2023, before pulling back down.

Investors have wildly different takes on whether the Fed's three-month-old easing cycle — designed to bring the benchmark rate back down to neutral as inflation cools — is just beginning or getting close to the end.

Economic forecasts include the possibility of higher inflation and slower growth that could stall future cuts to the federal fund rates.

Donald Trump's presidential victory, stubbornly elevated inflation and a steady drumbeat of strong economic data have pushed 10-year Treasury yields up sharply since mid-September — and there's no clear consensus of where they're likely to go.