A dramatic sell-off in US Treasuries on Wednesday has upended the long-held view of these government bonds as the ultimate safe haven.
The surge in yields—where the 10-year rose to 4.51 percent before settling at 4.42 percent and the 30-year broke the psychologically critical five-percent barrier—signals a rapid erosion of confidence.
The shift comes as new tariffs introduced by President Donald Trump take effect, accelerating fears of inflation and global trade uncertainty. Nigel Green, CEO and Founder of deVere Group, warned that “the so-called safe haven has been stripped bare” and observed that US Treasuries are now behaving more like high-risk assets rather than the traditional ballast for investors.
This unsettling market development has broader implications beyond American debt. The turbulence has been mirrored in financial centers like the UK and Japan, where borrowing costs have surged, underscoring the global reach of the disruption.
Hedge funds, long established as significant holders of Treasuries, have been forced to unwind complex trading strategies, intensifying the sell-off and contributing to widening spreads between Treasury yields and interest rate swaps. Such indicators point to deep fractures within market structures and raise questions about the continuing supremacy of the US dollar.
For decades, investors have relied on the greenback as a secure refuge during times of economic uncertainty, but the current volatility is testing this trusted role.
The unfolding instability in the US bond market represents not an isolated incident but a warning of structural change in global investing. Rising yields are tightening financial conditions at a time when economic recovery remains fragile. As tariffs inject further uncertainty into trade and investment flows, the inherent risks within what was once seen as an invulnerable asset are coming sharply into focus. Nigel Green cautioned that portfolios still banking on Treasuries as a universal fallback are now vulnerable, suggesting that the dynamics of global finance are rapidly evolving.
The situation calls for a reassessment of the traditional playbook, as safe havens in today’s market must now be earned rather than assumed. The unfolding bond market shock could have long-lasting ramifications on the international financial system, with potential to recalibrate the future of the US dollar as the global reserve currency.
