Divergence in Global Bond Yields Amid Easing Trade Tensions: Global sovereign bond yields saw noticeable divergence on Thursday,
yields declined in the United States and the United Kingdom while rising in Europe and Japan.
This movement came despite the ongoing calm in global trade tensions following
the U.S. administration’s announcement to suspend tariffs on dozens of countries.

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U.S. and U.K.
Direct Impact of Tariff Policy

U.S. and U.K. Yields Decline

The yield on the U.S. 10-year Treasury—the benchmark yield—fell by 10.3 basis points to 4.293%,
reflecting increased investor demand for U.S. bonds.
Meanwhile, the 2-year Treasury yield dropped by 10.6 basis points to 3.843%,
and the 30-year yield declined by 5.6 basis points to 4.734%.

In the U.K., the 10-year gilt yield declined, falling by 14.2 basis points to 4.673%.
Despite these declines, the bond markets remained relatively calm
as concerns over a potential escalation in the U.S. trade war with its partners continued to ease.

Conversely, bond yields in Europe and Japan increased.
Germany’s 10-year bond yield rose by 7.2 basis points to reach 2.652%
its highest level since the beginning of the month.
Earlier in the session, German bonds had experienced a significant jump of 19 basis points.

In Japan, the benchmark yield on sovereign bonds climbed by 6.3 basis points to 1.335%,
reflecting increased demand for Japanese bonds amid evolving global market conditions.

Direct Impact of Tariff Policy

These bond market movements followed the U.S. administration’s
announcement of a 90-day suspension of high tariffs on dozens of countries—except China,
whose import tariffs were raised to 125%.
The decision helped ease fears of a continued escalation in the trade war,
leading to a general improvement in market sentiment.

Despite the improved trade atmosphere,
results from the latest U.S. bond auction showed strong investor demand,
with a bid-to-cover ratio of 2.67, indicating continued appetite for U.S. debt even amid lingering trade concerns.

Amid these developments, it appears unlikely that Japan, China,
or the United Kingdom—the three largest holders of U.S. Treasury bonds
would retaliate against American trade policies by dumping U.S. debt.
While this possibility had been floated in some economic circles, reports from CNBC dismissed these expectations,
citing that the global market balance remains intact mainly despite current financial and trade challenges.

Divergence in Global Bond Yields Amid Easing Trade Tensions

Divergence in Global Bond Yields Amid Easing Trade Tensions

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