The tranquility of global markets was abruptly shattered this week as a potent cocktail of protectionist rhetoric and escalating fiscal concerns sent shockwaves through the United States’ financial landscape. US Treasury yields plummeted, with the benchmark 10-year yield falling sharply to 4.51%, as investors began to shed American assets in response to mounting uncertainties. This flight to safety was directly triggered by President Donald Trump’s renewed threats of significant tariffs, notably targeting iPhones manufactured abroad and hinting at a sweeping 25% duty on Apple products, igniting fears of a disruptive trade war. Compounding these worries, recent developments such as Moody’s credit outlook downgrade, the looming $3.8 trillion tax bill, and persistent trade tensions with the European Union have collectively intensified fears of both fiscal instability and resurgent inflation, painting a challenging picture for the world’s largest economy.
Source: create.vista.com
Trump’s Tariff Threats Spark “Sell America” Trend, Driving Down US Yields
US Treasury yields across the board are falling, with the benchmark 10-year note yield settling around 4.51%. This decline signals a growing “sell America” trend among investors, triggered by renewed protectionist threats from Donald Trump. His focus on imposing 25% tariffs on iPhones not made in the US and a proposed 50% duty on European imports (starting June 1) has intensified fears of a full-blown trade war.
This escalating rhetoric, particularly against a major US company like Apple, has rattled US equity markets and fueled outflows from US stocks, bonds, and even the Dollar. Compounding these trade anxieties are domestic fiscal concerns: Moody’s recently downgraded the US debt outlook, citing worries about fiscal improvement and persistent inflation exacerbated by tariffs. Adding to the fiscal pressure, a new $3.8 trillion tax bill is now moving through Congress, further dimming the US fiscal outlook and pushing the 30-year Treasury bond yield above 5%. The combination of trade escalation and fiscal deterioration is clearly pushing investors away from US assets.
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