Archive: https://archive.is/2025.04.09-073405/https://www.ft.com/content/0005e091-930d-46ff-9e81-8591704a9282
Treasuries sold off on Wednesday as President Donald Trump’s tariffs took effect, deepening investor concern about the “safe haven” status of US sovereign debt.
The 10-year US Treasury yield jumped to 4.51 per cent before falling back to 4.37 per cent — up 0.11 percentage points on the day — while the 30-year yield briefly rose above 5 per cent. The 10-year yield has risen from less than 3.9 per cent earlier this week.
The moves offer a new challenge to the Trump administration, which had previously cited lowering Treasury yields as a key policy aim, and could mark a loss of investor confidence in the world’s largest sovereign debt market.
“The sell-off may be signalling a regime shift whereby US Treasuries are no longer the global fixed-income safe haven,” said Ben Wiltshire, a rates strategist at Citi.
Little spoken about in serious financial mags (maybe they’re scared what it means) but what Trump is doing is basically retreat from the USD being global reserve currency. Nobody stores USD because that doesn’t make money, the easiest way to do that is with Treasuries. They’re accessible, liquid, and backed by the issuer of the de facto global trading currency. They also allow US to borrow with no limit realistically.
Right now US is taking on massive amounts of debt and imports while exporting their currency to provide stability in the global trade. That role was filled by The British Empire before, it’s a known mechanism. For the neoliberal democracies that worked out fine but it didn’t work for the working class or the global south because the way US wielded this power was rather irresponsible if not malicious. Changing USD status in the global economy might be beneficial to the Americans in the long run but it has to be done in a more coordinated manner across multiple decades probably.
China sits on a ton of US Treasuries. Being the biggest foreign investor was their insurance against what US is doing. I have no idea how much this will explode but I have a suspicion Trump might be brought to submission by the sheer reality he has brought upon himself very soon - not from retaliatory tariffs but from general Treasury sell-off. Some say China will want to make CNY/RMB new global trading currency but that’s just a pipe dream. They have strong currency controls because their ultra rich would run the moment they could.
Ugh, sounds like this will affect money market funds then.
Money market instruments are usually short term and backed by companies that rival smaller countries in size so it’s not given that they will get hit beyond what’s happening due to overall chaos. Junk bonds got hit first because they’re just risky, now treasuries join the gang but this part was intentional. Fixed income is still going to be safer than equities or derivatives overall.