On Friday, Treasury prices declined amid turbulent trading conditions, with market analysts highlighting increasing pressures within the $29 trillion U.S. government debt market. The yield on the 10-year Treasury reached as high as 4.58 percent, marking a significant decline for an asset widely regarded as the global financial system’s leading safe haven. Later, the yield receded to 4.48 percent after Susan Collins, President of the Boston Federal Reserve, stated to the Financial Times that the U.S. central bank was “absolutely prepared” to intervene to stabilize financial markets if necessary.
Investor confidence in U.S. policymaking and the economy was shaken due to Donald Trump’s unpredictable tariff strategies, leading to a withdrawal from American assets. Data from Bloomberg indicated that the 10-year yield increased by nearly 0.5 percentage points over the week, constituting the largest surge since 2001. Although Trump temporarily relented on his reciprocal tariffs targeting non-retaliating countries—extending a 90-day reprieve for most major U.S. trading partners—he imposed even higher tariffs on Chinese goods.
Peter Tchir, head of U.S. macro strategy at Academy Securities, highlighted substantial global pressure to divest from Treasuries and corporate bonds, especially among foreign holders, due to uncertainties surrounding Trump’s policies. A European banking executive in prime services noted concerning signals of a drastic loss of confidence in the world’s most robust bond market, rather than a typical sell-off.
Traders indicated that limited liquidity, or the ease of buying and selling Treasuries without influencing prices, was intensifying market volatility. JPMorgan analysts reported a significant deterioration in market depth—a reflection of the market’s capacity to process large trades without major price changes—prompting even minor trades to substantially affect yields.
A senior Treasury trading official from a major U.S. bond management firm described liquidity as suboptimal, revealing that market depth was operating at 80 percent below typical levels. Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott, further commented that market conditions were such that a minor disturbance could move rates by a quarter point.
This volatility in Treasuries was accompanied by a decline in the U.S. dollar, with an index measuring the currency’s strength against significant counterparts dropping up to 1.8 percent. Meanwhile, the British pound, Japanese yen, and Swiss franc all experienced notable gains.
