Global Bond Markets Whipsaw as Trump’s Tariff Pause Sends Yields into Reverse

Global bond markets witnessed dramatic shifts Thursday as traders recalibrated their positions following U.S. President Donald Trump’s surprise announcement of a 90-day pause on sweeping tariff hikes. The move, perceived by some as a strategic “Trump put,” temporarily stabilized global financial markets after a week of extreme volatility.

The announcement reversed a previously aggressive trade stance that had spooked investors and led to one of the sharpest Wall Street rallies in years. U.S. Treasury yields — which had surged in the wake of the original tariffs — cooled significantly, with the 10-year note falling nearly 10 basis points by mid-morning in New York. The 2-year yield dropped 14 basis points, while the 30-year retreated by 4 basis points.

“Trump Put” Calms Markets—For Now

The term "Trump put" — a play on the market phenomenon known as the "Fed put" — is being used by analysts to describe the White House's apparent effort to stem panic-driven sell-offs through a strategic policy reversal. Trump acknowledged watching the bond market closely, describing its behavior as "tricky" and noting that “people were getting a little queasy.”

Investors had initially fled bonds when Trump first unveiled unexpectedly harsh tariffs against over 180 nations, causing U.S. government securities to behave counter to their typical role as safe-haven assets. Now, with the pause in place, there’s hope the pressure on inflation and interest rates might ease, at least in the short term.

Dhaval Joshi, chief counterpoint strategist at BCA Research, told CNBC Europe that the recent bond moves likely rattled Trump more than the equity sell-off due to their ripple effects on consumer borrowing costs — especially mortgages.

Joshi also alluded to speculation that China had begun offloading U.S. assets in response to the tariffs, further shaking markets. While unconfirmed, the mere rumor was enough to stir concern within U.S. policy circles, granting China unexpected leverage in the ongoing trade dispute.

European and Asian Yields React Sharply

The reaction wasn’t limited to the U.S. In Europe, bond yields also reversed earlier trends. Germany’s 2-year bund yield climbed 11 basis points, while its 10-year equivalent inched up by 2 points. The U.K., in particular, saw a dramatic turnaround: yields on 30-year gilts, which spiked as much as 30 basis points on Wednesday, fell 17 basis points on Thursday following the U.S. policy shift.

Sanjay Raja, chief U.K. economist at Deutsche Bank Research, told CNBC that the tariff pause provided a critical breather. “Similar to what we saw in the U.S. yesterday, long-end bonds are rallying today,” he said. “There’s a sense of relief that trade deals with the U.S. are once again on the table.”

In Asia, the impact was more muted. Japan’s 10-year and 2-year bond yields rose 7 and 5 basis points respectively, driven by renewed risk appetite in equities. Australia’s 2-year bond yield, which had fallen sharply following the initial tariff announcements, edged up 2 basis points.

Nikko Asset Management, in a client note, remained optimistic on Asian fixed income, citing supportive central banks and stable inflation. “Concerns over potential growth shocks from U.S. tariffs are likely to provide additional support for regional bond markets,” the firm said.

Outlook Remains Clouded

Despite Thursday’s market reprieve, analysts caution that uncertainty remains high. John Higgins, chief markets economist at Capital Economics, noted that recent volatility reflects deeper investor concerns about monetary policy and global economic direction.

“The latest news from the White House has reduced the immediate risk of recession,” Higgins said. “But the swings in long-dated Treasuries and Gilts may have also been driven by profit-taking or even forced sales by leveraged investors amid the equity sell-off.”

He warned that without clear guidance on whether the paused tariffs will return, or how other countries—especially China—will respond, market sentiment is likely to remain fragile.

The current environment reflects a rare confluence of political unpredictability and financial market sensitivity. While Thursday’s reversal offered some stability, the underlying issues—ranging from global trade tensions to monetary policy dilemmas—remain unresolved.