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Geopolitical Worries Shake Long-Term Treasuries: U.S. long-term Treasury bonds came under intense pressure on Tuesday as investors reacted to President Donald Trump’s announcement of 10% tariffs on imports from eight European countries starting next month. The sell-off in the roughly $30 trillion bond market drove 10-year Treasury yields close to 4.31%, approaching a five-month high, while 30-year yields jumped to 4.95%, marking their highest level in over four months. This represents the largest daily loss in long-term bonds since mid-July 2025, reflecting investor jitters over renewed trade tensions.
Greenland Ambitions and Global Market Ripples
Treasuries are serving as a mirror for geopolitical anxiety. Europe, a major holder of U.S. debt with over $1.5 trillion in Treasury securities, reacted cautiously to Trump’s latest tariff threat. The Danish pension fund AkademikerPension is reportedly preparing to reduce its U.S. bond holdings by month’s end. Investors worry that escalating tensions over Greenland and other trade moves could undermine U.S. financial stability, making American assets less attractive in the near term.
Japan’s Stimulus Plans Add to Market Volatility
Markets are also closely monitoring Japan, where Prime Minister Sanae Takaichi’s promise of temporary sales-tax cuts on food has pushed 10-year Japanese bond yields to a 27-year high. Investors are weighing how Japan’s fiscal stimulus could impact global liquidity, currency movements, and inflation expectations. The combined effect of U.S. trade actions and Japan’s economic policies has heightened uncertainty, widening yield curves and sparking concerns about long-term financial risks.
Treasuries Remain Central Despite Turbulence
Despite the turmoil, the U.S. Treasury market remains the largest and most liquid in the world, anchoring the global financial system. While yields may continue to fluctuate amid geopolitical and economic tensions, a sustained sell-off would take time to materialize, leaving investors with a window to assess risks and recalibrate positions.
