By Emese Bartha
Bond markets were adjusting to U.S. President Trump's shifting tariff strategy Thursday, with Treasury yields continuing to ease sharply even as Japanese and eurozone bond yields rose.
The moves represented something of a return to normal amid huge relief for investors in U.S. government debt. Trump's sweeping global tariffs had caused a wave of selling leading to soaring yields, which move inversely to prices, and spreading alarm about Treasurys' safe-haven status even as equities markets tanked.
On Thursday, risk appetite returned following Trump's decision to pause the implementation of steep tariffs on more than 100 countries. Stock markets in Asia and Europe soared. That in turn led to falls in Japanese government bonds, known as JGBs, and eurozone sovereign debt, a typical response to rising stock markets.
The 10-year U.S. Treasury yield was recently down 10 basis points at 4.302%.
Late in Asia, the 10-year JGB yield was up 8.69 basis points, while the 10-year Bund yield was last up 6 basis points at 2.635%.
"The current decline in Treasury yields is a partial reversion to the massive selloff in the past days, with the reversal naturally triggered by Trump's U-turn on tariffs last night," Jussi Hiljanen, chief strategist for U.S. dollar and euro rates at SEB Research, said.
The strong Bund performance earlier this week was due to safe-haven buying amid the turbulence in the U.S. Treasury market, Hiljanen said.
"This safe-haven bid is fading for now following last night's news."
Still, in the medium to longer term, German Bunds are expected to benefit, with money markets pricing in a quarter percentage-point rate cut at the European Central Bank's next policy meeting April 17, followed by another one in June and another in October, according to LSEG data.
"The increased volatility will also remain, preventing a full restoration of risk sentiment," ING's rates strategists said in a note. "Increased volatility means safe assets such as 10-year Bunds may see elevated demand," they wrote.
Treasurys, meanwhile, can take further cues from U.S. inflation data due at 1230 GMT. Meanwhile, there is a $22 billion auction of 30-year bonds at 1700 GMT.
Write to Emese Bartha at emese.bartha@wsj.com
(END) Dow Jones Newswires
April 10, 2025 08:04 ET (12:04 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.