Tariffs caused US Treasury market dislocations, raising concerns about future stability of the market

From Yahoo Finance: 2025-04-10 00:12:00

The searing selloff in Treasuries triggered by tariffs caused concerns in the bond market, with widening bid-ask spreads indicating dislocations. Yields rose despite Trump’s tariff pause, marking the biggest weekly jump since 2001. Hedge funds unwinding leverage trades added stress, prompting banks to pull back financing.

Hedge funds, key players in Treasuries, faced pressure as the market sold off, needing additional collateral. With leverage providers nervous, some hedge funds unwound trades. Rates trading desks saw de-risking in long U.S. Treasuries swaps amid soaring yields, while basis trades remained stable. Market conditions improved as New York trading began.

Trump’s tariff pause eased some market anxiety, with a robust 10-year note auction calming investors. The sudden announcement left market players pondering what’s next, with analysts suggesting the end of U.S. exceptionalism financially. The challenge to the risk-free curve of U.S. Treasuries raises concerns about the future stability of the market.



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