The initial market reaction to Trump's suggestion of imposing a 50% tariff on EU products caused investors to shift towards a risk-off strategy, leading to significant sell-offs in both the equity market and the cryptocurrency market. Simultaneously, debt instruments experienced dynamic growth. In particular, yields on 10-year US Treasury bonds and 10-year German bunds saw a noticeable decline.
However, a partial loss of momentum is now visible in the US bond market. At the same time, the decline in German bond yields remains more pronounced. It's important to remember that US bond yields are shaped not only by investors seeking "safe haven" assets but also by concerns regarding the stability of US debt. Uncertainty related to the US President's policies, along with yesterday's bill imposing higher pressure on the US budget deficit and the record pace of US borrowing, are partly hindering further declines in US bond yields.
Yields on 10-year US Treasury bonds are partially recovering from the declines triggered by Trump's announcement. Source: Bloomberg Finance L.P.
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