The sale of state bonder Longer was accelerated, aggravating the decline in bond equivalents around the world, as the escalation of the trade war sowed doubts about the refuge of US government debt.
The performance of 30 years of government bonds jumped up to 25 basis points at a level not observed in November 2023, raising its rise this week to over half a percentage point.
This has contributed to the sale of state debt in many developed markets worldwide, with references to Australia, New Zealand and Japan to launch and the futures of French bonds to retreat.
US government bonds – included in safer assets in times of turmoil – seem to lose this regime amid concerns that US inflation can prevent interest rates from the US Federal Bank. Investors turning in cash -like media, disorders in the US SWAP market, and overseas US debt speculation have also been referred to as reasons behind the fall of bonds.
“This is a sale of government bonds,” said Calvin Yeoh, a portfolio manager at the Hedge Fund Blue Edge Advisors PTE. who sells contracts for the future of 20 to 30 years of government bonds. “This is like ice sculpture in a forest fire – everything that looked good a second has now disappeared.”
Wednesday marked another milestone in the trade war, as President Donald Trump made the so -called mutual duties, increasing the risk of shock to the global economy. It imposes contributions to China reaching 104% along with import taxes on about 60 trade partners with a trade surplus with the US. Some investors have assumed that world reserves, for example, China, could reassess their positions on US state debt, given the earthquake impact on Trump’s commercial policies. Such a move would send a powerful message that government bonds are no longer the old refuge, but such transactions are rarely telegraphed in real time.
Both China and Japan have reduced their state bonds for some time, at least according to official data. “China can sell them in retaliation for duties,” said Kenichiro Kitamura, General Manager of Meiji Yasuda’s Investment Planning and Research Department in Tokyo. State bonds “are moving because of political factors and not due to supply and demand, so I will wait for the moment to see. It is difficult to get involved right now.”
Worldwide moves elsewhere, Japanese government bonds have fallen, with the sale focusing on longer debts, as increased market volatility prompted investors to reduce their exposure to floating returns. The Japan bond market has begun to show some signs of disorders with investors being marginalized amid increased uncertainty about trade war and what this means to the Bank of Japan’s policy. Japanese government bonds recede as volatility reduces appetite and in an unusual movement, another traditional US refuge – the dollar – weakened, despite rising yields. This has helped to increase profits in other shelters, such as the General and the Swiss franc, which were reinforced by both over 1%. However, other bond markets have done better – Future fulfillment contracts for German bonds increased on Wednesday.
“Extremely hostile 100%+ duties in China can raise great concern for reserve managers,” said Rajeev de Mello, a global macroeconomic portfolio manager at Gama Asset Management. “European bonds have benefited from it and the spread between the US and Germany has moved strongly in the last week.” Not everyone believes that government bonds have lost their attractiveness as a refuge. Leah Traub, Capital Manager at Lord Abbett & Co. which oversees $ 217 billion in assets, remembers their negative association with shares in March, when markets reacted to fears of slowing down US growth. “In the event of recession in the US or worldwide, we still believe that investors will return to state bonds,” she said.