Treasury Yields Rise Again as Investors Shift Away From Government Bonds

Yields on US government bonds rose on Tuesday, signaling a continued retreat by investors from Treasury securities following last week’s dramatic bond market volatility.

As of 7:25 a.m. ET, the yield on the benchmark 10-year Treasury note climbed nearly 3 basis points to 4.395%, while the 2-year yield rose approximately 4 basis points to 3.87%. Yields move inversely to prices, meaning rising yields indicate declining bond prices.

This renewed uptick follows a brief pause on Monday, when yields fell after the White House temporarily exempted certain consumer electronics from new tariff measures. The market had reacted positively to President Donald Trump’s 90-day pause on “reciprocal” tariffs, especially those affecting the tech sector. However, concerns over the broader direction of fiscal and trade policy appear to have reasserted themselves.

Last week’s sharp sell-off drove the 10-year yield up by over 50 basis points—its steepest weekly rise since 2001—raising fresh questions about the stability of demand for US debt. Despite its traditional role as a safe-haven asset, Treasuries have faced increased selling pressure amid growing uncertainty over tariffs and the broader economic outlook.

“Investors in the US have worried for decades that holdings of US governments by Chinese and Japanese investors were at risk,” said Carol Schleif, chief market strategist at BMO Private Wealth.

China, the second-largest foreign holder of US debt after Japan, currently holds about $760 billion in Treasury securities.

Analysts have also pointed to the role of hedge funds and institutional investors in accelerating the sell-off. Felix Brill, chief investment officer at VP Bank, noted an increase in credit default swap (CDS) spreads on US debt—an indicator of rising perceived risk.

“We know from past episodes that margin calls and the need for liquidity can lead to additional market stress,” Brill said in an interview with CNBC.

Despite the uncertainty, some investors see the recent rise in yields as a potential opportunity.

“Government bonds look very attractive here,” said Mohit Mittal, CIO of core strategies at bond giant Pimco. “If you expect US growth to decline further, then yields could be much lower going forward.”

Mittal cautioned, however, that the broader policy environment remains a challenge.

“Until we get more certainty, businesses and consumers will continue to act with caution. That brings us closer to a recession in 2025. That’s the fundamental story for the bond market,” he said.

Treasury Secretary Scott Bessent pushed back against speculation that foreign governments were reducing their holdings of US debt. Speaking on television Monday, Bessent stated there was “no evidence of significant sovereign foreign selling.” This was supported by data from the New York Federal Reserve, which indicated a modest increase in official-sector holdings for the week ending April 9, according to Bank of America strategist Meghan Swiber.

Meanwhile, US equities rebounded modestly on Monday. The S&P 500 rose 0.8%, trimming its year-to-date losses to 8.1%, while the Nasdaq Composite gained 0.6%. Still, the underlying tone of the market remains cautious.

“Trump’s tariff maneuvers may have temporarily paused some investor anxiety,” said Ulrike Hoffmann-Burchardi, CIO of global equities at UBS Global Wealth Management. “But the broader uncertainty lingers, especially when it comes to long-term economic policy.”

With input from CNBC and the Financial Times.