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US bonds steadied on Wednesday after Donald Trump’s latest tariff threats were seen by investors as milder than feared.
Author of the article:
Bloomberg News
Alice Gledhill
Published Jan 22, 2025 • 1 minute read
![gwim7xhbx]jo66pji}nk0l2v_media_dl_1.png](https://smartcdn.gprod.postmedia.digital/financialpost/wp-content/uploads/2025/01/us-bonds-have-steadied-after-sharp-new-year-slump-sign-that.jpg?quality=90&strip=all&w=288&h=216&sig=kvpETgntqAc7XEC8H4kCBA)
(Bloomberg) — US bonds steadied on Wednesday after Donald Trump’s latest tariff threats were seen by investors as milder than feared.
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Treasury yields fell around one basis point across the curve and remained well below the highs reached at the start of the year, with the 10-year rate at 4.57%. A gauge of future rates volatility has also retreated from a peak just over a week ago.
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It’s a sign of relief that Trump has, for now, opted to take a more measured approach to some policies than markets feared, particularly on international trade. While he’s widened threats beyond Mexico and Canada to China and Europe, he’s not slapped on tariffs from day one.
Investors may decide “Trump’s bark is worse than his bite when it comes to tariffs,” said Kathleen Brooks, research director at XTB. “The EU may also be hopeful that they could see a ‘tariff light’ approach from the US.”
While Trump has talked about implementing tariffs from Feb. 1, the only action he’s taken so far was to call for a review of trade practices that’s due by April 1 — potentially giving China and others almost 10 weeks to avert new levies or address his demands. His latest threat of 10% taxes on Chinese exports is far lower than the 60% he mulled at one point last year.
The relief rally is most visible in long bonds, with the US 30-year yield now about 20 basis points lower than last week’s peak, at 4.78%. European yields have also retreated despite heavy issuance, with the UK and France both drawing record orders for bond sales on Tuesday. The US Treasury will sell $13 billion of 20-year bonds later on Wednesday.
Trump Widens Tariff Threats to China, Europe on Day 2 in Office
“Markets seem comfortable,” said Michael Leister, head of interest rates strategy at Commerzbank. “Neither Trump nor the supply wave are delivering surprises relative to what had been priced in before.”
—With assistance from Greg Ritchie and James Hirai.
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English (US)