Recent tariff announcements triggered a major selloff in the US Treasury market, causing market dislocations including widened bid-ask spreads.
Though President Trump temporarily paused the tariffs (even remarking that the “bond market now is beautiful”), Treasury yields still remained elevated.
Several hedge funds unwound leveraged positions, straining bank balance sheets and raising concerns about potential long-term damage to US financial markets.
Market experts remain concerned about lasting damage, with Deutsche Bank analysts noting: “The damage has been done… both in terms of relative economic growth outcomes and foreign investor willingness to fund the U.S. external deficit.”