Markets React: Trump Tariffs Send Treasuries Down, Gold to Record High

(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 six basis points to 4.90%. A slump in Japanese bonds deepened, sending yields soaring to records as investors gave a thumbs down to Prime Minister Sanae Takaichi’s election pitch to cut taxes on food. Equity-index futures indicated US shares will fall when Wall Street reopens, while contracts indicated more losses for European stocks after their worst day since mid-November. Asian shares slipped 0.6%, the most in more than a week. As sentiment deteriorated, demand for haven assets surged, sending gold and silver to record highs. A gauge of the dollar fell to a two-week low. 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. Trump also took shots at Macron for rejecting his invitation to join a proposed Board of Peace, and suggested he could impose a 200% tariff on champagne. What Bloomberg’s Strategists Say… There’s very little in the way of assets that are gaining on Tuesday, and the lack of bounce for major sovereign bonds is of particular note. The lack of a bid for what have been traditional havens underscores the extra levels of uncertainty as investors struggle to price for a Greenland confrontation very few expected to dominate global news flows in the way it is now doing. — Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis. 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. The yield on 30-year and 40-year bonds climbed more than 25 basis points. A lackluster auction of 20-year the tenor earlier underscored broader worries over government spending and inflation. The yen weakened 0.2% against the dollar. Investors are on guard for such moves spilling over into global markets amid the prospect of continued volatility in Tokyo trading ahead of the snap poll Takaichi is scheduling for Feb. 8. 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. Australian and New Zealand bonds also fell, while German bund futures declined. “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 1.3% as of 3:27 p.m. Tokyo time S&P/ASX 200 futures fell 0.2% Japan’s Topix fell 0.9% Hong Kong’s Hang Seng fell 0.1% The Shanghai Composite fell 0.3% Euro Stoxx 50 futures fell 0.1% Currencies The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1665 The Japanese yen fell 0.2% to 158.40 per dollar The offshore yuan was little changed at 6.9552 per dollar Cryptocurrencies Bitcoin fell 2% to $91,075.75 Ether fell 2.3% to $3,136.76 Bonds The yield on 10-year Treasuries advanced five basis points to 4.27% Japan’s 10-year yield advanced eight basis points to 2.340% 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 0.9% to $4,713.03 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.