Treasuries Drop as Trump Tariffs Spark Market Selloff

(Bloomberg) — Treasuries joined a selloff in global bonds and stocks pulled back as President Donald Trump’s Greenland-related tariff threats reignited trade tensions, testing market confidence after a rally fueled by investments in artificial intelligence. Treasuries fell as trading of the securities resumed after a US holiday Monday on concern the Trump administration’s aggressive stance toward global peers will curb demand for American assets. Longer maturities led losses, with the 30-year yield climbing four basis points to 4.88%. A gauge of the dollar fell to a two-week low. Equity-index futures indicated losses for US shares when Wall Street reopens, while contracts indicated more losses for European stocks after their worst day since mid-November. Asian shares slipped the most in more than a week. Investors increased bets on haven assets with gold and silver hitting records highs. Trump’s threat to impose tariffs on eight countries opposing his bid to control Greenland, and pushback from Europe, has reignited volatility and driven investors toward precious metals. The renewed trade tensions come against a backdrop of concerns over the Federal Reserve’s independence and Trump’s policies such as a cap credit-card rates in the US. “The markets seem to be taking a very risk-off position to this new development in tariffs,” Hebe Chen, an analyst at Vantage Markets, said on Bloomberg Television. “The key message is tariffs risk, as well as trade risk, isn’t going anywhere.” The US-Europe standoff comes as resilient earnings and ongoing investment in AI have underpinned risk appetite. Market direction now partly depends on the European Union’s response, with the bloc considering tariffs on €93 billion ($108 billion) of US goods. French President Emmanuel Macron intended to request the activation of the EU’s so-called anti-coercion instrument. German leader Friedrich Merz, however, said Monday his country’s heavier dependence on exports means it’s less willing to unleash the countermeasure. Trump renewed his push for Greenland, claiming the European Union won’t push back too much. What Bloomberg’s Strategists Say… The negativity from President Trump’s disruptive policies looks to be generating at the very least a reluctance to add to US assets among investors. There are clear signs traders are positioning for a revival of last year’s “Sell America” theme. — Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis. While most stock markets declined, South Korean shares extended their winning run to a record-equaling 13 days. The Kospi — a bellwether for AI investments — is the world’s second best-performing gauge worldwide this year. Taiwanese stocks also rose. Asian markets have largely shrugged off the US-Europe tussle, said Derek Tay, head of investments at Kamet Capital Partners. “Some Wall Street strategists still largely believe investors should buy the dip if equities fall due to tariff fears,” Tay said. “Still, we need to expect that policy related volatility, such as catching headlines over the weekend, will persist.” Attention in Asia was on Japan, where the country’s 40-year bond yield rose to 4% on Tuesday, the highest since its debut in 2007. Also, a 20-year government bond sale saw weaker demand than its 12-month average. Global bonds have started the year on the backfoot after rounding off their biggest annual gain since 2020 as investors demand higher yields to compensate for persistent inflation and rising government borrowings. “The long end of the global sovereign curves feels fragile,” said Andrew Ticehurst, senior rates strategist at Nomura Australia Ltd. in Sydney. There is lingering uncertainty around threats to Fed’s independence, growing speculation that Rick Rieder may be the next Fed Chair, and a possible Supreme Court ruling against some of Trump’s tariffs that could add to concerns around the budget position, he said. With Wall Street closed on Monday, the markets haven’t had a complete opportunity to discount the fallout from the latest escalation in geopolitical risk, Kyle Rodda, a senior analyst at Capital.com, wrote in a note. Trump is scheduled to address the World Economic Forum in Davos on Wednesday. “There’ll be an eagle eye on Davos and what the US does and US President Donald Trump says about its bid to acquire Greenland,” Rodda wrote. Some of the main moves in markets: Stocks S&P 500 futures fell 1% as of 2:18 p.m. Tokyo time Japan’s Topix fell 0.8% Australia’s S&P/ASX 200 fell 0.7% Hong Kong’s Hang Seng rose 0.1% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures fell 0.1% Currencies The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.2% to $1.1671 The Japanese yen was little changed at 157.98 per dollar The offshore yuan was little changed at 6.9543 per dollar Cryptocurrencies Bitcoin fell 1.6% to $91,476.93 Ether fell 1.6% to $3,159.03 Bonds The yield on 10-year Treasuries advanced three basis points to 4.26% Japan’s 10-year yield advanced seven basis points to 2.330% Australia’s 10-year yield advanced four basis points to 4.78% Commodities West Texas Intermediate crude rose 0.2% to $59.58 a barrel Spot gold rose 0.6% to $4,698.71 an ounce This story was produced with the assistance of Bloomberg Automation. –With assistance from Bernadette Toh, Lin Zhu, Ruth Carson and Mia Glass. ©2026 Bloomberg L.P.