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Bedour Ibrahim
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Stocks listed in Europe and Asia lost ground

Global bonds rally as fresh trade tensions send investors flocking to safety

Tue, Oct. 14, 2025
Government bonds
Government bonds

Government bonds rallied across the globe on Tuesday as risk-off sentiment gripped equity markets and saw investors piling into safer assets.

Stocks listed in Europe and Asia lost ground and U.S. stock futures dropped as investors weighed the potential fallout from renewed U.S.-China trade tensions after President Donald Trump slapped new 100% tariffs on Chinese goods. The levies, which will apply to Chinese imports from Nov. 1, came in response to Beijing tightening export controls on critical rare earth minerals.

Trump’s initial announcement on Friday saw $2 trillion in value wiped off of stock markets.

Government bonds rallied across the globe on Tuesday. The yield on the U.K.’s benchmark 10-year government bonds, known as gilts, lost 8 basis points by 1:46 p.m. in London (8:46 a.m. ET), while yields on U.S. 10-year Treasurys were 3 basis points lower, paring deeper losses seen earlier in the day. Yields on government bonds in France, Germany, Italy, Australia and Japan also edged lower.

One basis point is equal to 0.01% and yields and prices move in opposite directions.

Bond yields reflect borrowing costs for the governments who issue them, but can have an effect on mortgage rates, investment returns, the wider economy and personal borrowing.

Certain markets have their own domestic issues at play. An uptick in unemployment in the U.K., political instability in France, and the ongoing U.S. government shutdown are also influencing investors in those respective markets, for example.

However, market watchers told CNBC that Tuesday’s rally in sovereign bonds was largely due to a broad move into safer assets. Alongside bonds, gold, the Japanese yen and the Swiss franc — all typically regarded as safe haven assets in times of uncertainty or volatility — moved higher.

Investors are seeking options to ride out fresh tariffs-induced volatility, according to Marc Ostwald, chief economist and global strategist at London’s ADM Investor Services.

“The move lower in [developed markets] yields is broad based, and a function of flight to safety due to rising volatility in risk assets, even if a lot of this is very knee-jerk, and as we saw yesterday can turn on sixpence into renewed risk appetite,” he said in an email.

Monday saw a brief reprieve for equities following Friday’s selloff, with Wall Street’s major averages clawing back some of the previous session’s losses, while European stocks also notched gains.

“It is all tied to the now typical ambiguous and posturing headlines and measures from the U.S. and China in respect of trade relations and negotiations, and unlikely to dissipate in the near term,” Ostwald added on Tuesday.

“Longer term concerns about political instability … and headwinds from the high level of government debt, which no DM government is doing anything to address, will tend to temper gains, [but] this week’s speeches at the IMF/World Bank … which may offer hints on relaxing bank capital rules with regards to purchases of [U.S. Treasurys] could also give bonds something of a tailwind,” he said in reference to the IMF and the World Bank’s Annual Meetings taking place in Washington, D.C., this week.