Bond sell-off accelerates as Trump ramps up tariff threats

U.S. Treasurys and other countries’ government bonds continued to sell off on Tuesday, as the White House’s rhetoric on tariffs fueled fresh fears of a trade war between the U.S. and Europe.

By 6:10 a.m. ET, yields on U.S. Treasury yields had spiked, particularly at the long end of the maturity curve. The yield on the 30-year Treasury jumped 9 basis points higher to trade at 4.93%, taking it closer to the crucial 5% threshold.

Meanwhile, the yield on the benchmark 10-year Treasury added 6 basis points to settle at around 4.291%. One basis point is equal to 0.01%, and yields and prices move in opposite directions.

In Europe, yields also moved higher. The 10-year German bund — a benchmark for the euro zone — saw its yield added 4 basis points to 2.8831%, while the yield on 30-year bunds advanced almost 6 basis points to 3.512%.

At the same time, U.K. government bonds, known as gilts, saw a sharp sell off, with 30-year gilt yields adding 9 basis points to trade at 5.253% while the benchmark 10-year gilt added 7 basis points. The U.K. currently has the highest long-term government borrowing costs of any G7 nation.

Yields on bonds issued by the governments of France, Italy, Switzerland and Australia also ticked higher on Tuesday.

“The basic problem in the global bond market is this: major governments of the major economies are living deficits. They’ve accumulated a great deal of debt, and investors are starting to demonstrate that they’re not happy about that,” Ed Yardeni, president of Yardeni Research, said.

Japanese yields hit record high

Elswhere, Japan’s 40-year government bond yield hit a record high on Tuesday as investors worried that proposed cuts to the food sales tax could worsen the country’s fiscal position.

The long-dated yield rose nearly 3 basis points to 4.213%, the highest level since the 40-year maturity was introduced.

Yields on shorter maturities climbed sharply as well. The 10-year Japan government bond yield rose by over 10 basis points to 2.38%, the highest level since 1999, while yields on the 20-year tenor jumped by around 22 basis points to 3.47%.

The selloff came a day after Prime Minister Sanae Takaichi said she plans to dissolve parliament on Friday and call a snap election on Feb. 8, setting the stage for a campaign that is expected to focus heavily on economic policy.