Cover: Sell-Off in Treasuries Threatens U.S. as Safe Haven (AI Translation)
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文｜财新周刊 王力为 丁锋 王石玉
By Caixin Weekly's Wang Liwei, Ding Feng, and Wang Shiyu
2025年4月以来，素来被全球投资者视为“避风港”的美国国债，经历了一场狂风骤雨。
Since April 2025, U.S. Treasury bonds, long regarded by global investors as a "safe haven," have weathered a storm.
4月7日至11日，在美股大幅下跌的同时，被当成“全球资产定价之锚”的10年期美国国债收益率攀升56个基点（BP）、一度触及4.53%，创下2001年以来最大单周涨幅；30年期美国国债收益率也攀升44BP、最高触及4.97%，创下1982年以来最大单周涨幅。
From April 7 to 11, as U.S. stocks saw a sharp decline, the yield on 10-year U.S. Treasury bonds—widely regarded as the “anchor for global asset pricing”—jumped 56 basis points (bps), briefly reaching 4.53%. This marked the largest one-week increase since 2001. Meanwhile, the yield on 30-year U.S. Treasury bonds climbed 44 basis points, peaking at 4.97%, the steepest weekly rise since 1982.
由于债券收益率与价格呈反向关系，收益率飙升，意味着市场的抛售导致债券价格下跌。这是比美股动荡更重要的信号。
Because bond yields and prices move in opposite directions, a surge in yields indicates that market sell-offs are driving bond prices down. This is an even more significant signal than the recent volatility in U.S. equities.
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- In April 2025, U.S. Treasury yields surged (10-year up 56 bps, 30-year up 44 bps), while stocks and the U.S. dollar also fell, reflecting shaken confidence in Treasurys as safe haven assets amid rising U.S. fiscal deficits ($36.22 trillion debt, $1 trillion annual interest).
- The sell-off was mainly driven by hedge funds’ forced liquidations and portfolio adjustments, not by major foreign central banks.
- Experts warn of sustained risks to U.S. fiscal sustainability and dollar dominance, but stress there are still no clear alternatives to U.S. Treasurys or the dollar in global finance.
Summary:
In April 2025, the U.S. Treasury bond market, historically seen as a global “safe haven,” experienced extraordinary volatility. Yields on the 10-year Treasury surged 56 basis points in a single week to 4.53%, the largest weekly jump since 2001, while 30-year bonds rose 44 basis points to 4.97%, marking the sharpest rise since 1982 [para. 1]. Typically, in times of turmoil, Treasurys strengthen as investors seek safety; however, this time, yields shot up alongside a falling U.S. dollar, defying normal safe-haven behavior. Former Treasury Secretary Janet Yellen and other experts described this “highly unusual” scenario as a sign that investors may be losing faith in both Treasurys and the dollar [para. 2][para. 3].
Concerns are intensified by fiscal pressures: U.S. national debt stood at $36.22 trillion, with annual interest payments exceeding $1 trillion. Foreign holdings now account for less than $9 trillion, and Treasurys maturing in 2025 are projected to reach $10 trillion, over 30% of U.S. GDP [para. 6]. Each 1 percentage point rise in interest costs adds about $187 billion in annual interest payments [para. 6]. Notably, Elon Musk, in government cost-cutting efforts, managed only $150 billion in reductions—far short of addressing the debt issue [para. 6]. The U.S. Dollar Index dipped to a three-year low, while gold prices hit new highs, signifying a declining confidence in both Treasurys and the dollar as safe assets [para. 7][para. 8].
Market volatility is driven by both macroeconomic shifts (recession fears, policy uncertainty, inflation) and sudden swings: the 10-year yield moved between 4-4.5% in a short period, and a rare “triple whammy” of falling stocks, bonds, and the dollar was observed in April [para. 11][para. 15]. The volatility’s speed—rather than absolute levels—triggers concerns about a deeper shift in global market sentiment [para. 13][para. 14].
The sell-off was largely attributed not to foreign central banks, but to hedge funds and “basis trade” investors (those exploiting price differences between bonds and futures), who were forced to unwind positions amid volatility [para. 38][para. 41]. Foreign ownership of Treasurys has declined from about 50% in 2008 to less than 25% now [para. 37], with Japan, China, and the UK being the largest foreign holders [para. 52]. Despite rumors, major foreign holders (notably Japan) deny any strategic mass Treasury sell-off [para. 48-50]. Analysis suggests foreign central banks have modestly increased their holdings recently [para. 47].
Rising yields place increasing strain on U.S. fiscal sustainability, as higher rates drive up servicing costs and deficits [para. 57]. The Congressional Budget Office projects deficits to surpass $2 trillion in fiscal 2025—almost 7% of GDP—while interest payments near 4% of GDP [para. 65]. Market participants fear that further tax cuts or fiscal stimulus could worsen the deficit, possibly pushing the 10-year yield towards 4.9% or higher, stressing U.S. creditworthiness [para. 73-78].
The foundation of Treasurys as risk-free, high-liquidity assets is showing cracks. Foreign investors have reduced overweight allocations, and institutions like PIMCO are diversifying away from U.S. Treasurys [para. 92-95]. Comparatively, Treasurys remain higher-yielding than German, Chinese, or Japanese government bonds, but currency risk now weighs more heavily on allocations [para. 98-102].
Recent proposals from Trump administration advisors—such as the “Mar-a-Lago Accord,” suggesting century bonds and fees on foreign interest earned—reflect potential policy volatility but are seen as unlikely in the near term [para. 107-112]. Still, such proposals signal rising geopolitical and financial tensions [para. 113-115].
Finally, while the U.S. dollar remains the world’s anchor currency, its dominance is increasingly questioned as deficits balloon and confidence wavers [para. 124-128]. Even as no clear alternative emerges—since neither the euro nor yuan is ready to fill the role—experts warn that policy missteps could accelerate de-dollarization and diminish the safe-haven premium long associated with U.S. assets [para. 130-134][para. 137-144].
["Paragraph markers correspond to initial content sections."]
- Standard Chartered Bank
渣打银行 - According to the article, Eric Robertsen, Chief Strategist and Global Head of Research at Standard Chartered Bank, states that despite recent volatility, U.S. Treasuries remain the most liquid and highest-yielding government bonds globally. He notes that a 5% yield is still attractive for investors, although the market is seeing some reallocation to non-U.S. assets due to shifting confidence.
- Morgan Stanley
摩根士丹利 - According to the article, Stephen Roach, former Chief Economist at Morgan Stanley and now a Senior Fellow at Yale Law School's Paul Tsai China Center, commented on U.S. Treasury bonds. He noted that recent changes in U.S. Treasury yields seem to reflect early-stage shifts in investor sentiment, rather than a fundamental loss of interest in dollar assets. Roach emphasized that policy uncertainty is contributing to current market volatility.
- JD.com
京东集团 - The article mentions that Shen Jianguang, who previously served as a senior economist at the European Central Bank, is currently the Chief Economist at JD.com (Jingdong Group). He provides analysis on the impact of U.S. policy changes on global investor confidence, particularly highlighting how recent events have diminished faith in the U.S. dollar. No other detailed information about JD.com is provided in the article.
- China Merchants Securities
招商证券 - China Merchants Securities is mentioned in the article for its fixed income research, which notes that, based on past experience, changes in the scale of Federal Reserve bond purchases, U.S. Treasury supply, and shifts in other allocation forces are key factors affecting the term premium of U.S. Treasuries. The report also states that in the current context of increased U.S. tariffs, concerns are rising about reduced or even decreased foreign demand for U.S. Treasuries.
- UBS
瑞银 - According to the article, UBS analyzed that due to market expectations of U.S. economic weakness, the Fed may cut rates sooner, resulting in lower short-term U.S. Treasury yields while long-term yields rise. This contrasts with the traditional view of U.S. Treasuries as safe-haven assets. For example, on April 21, the 2-year U.S. Treasury yield fell by 3 basis points to 3.77%, while the 30-year yield rose by 6 basis points.
- Fudan Development Institute
复旦大学发展研究院 - According to the article, Wu Jinduo is identified as a part-time researcher at the Fudan Development Institute. The institute is affiliated with Fudan University in China and focuses on development research and policy analysis. In this context, Wu Jinduo contributed analysis on international bond markets and basis trading strategies relevant to recent US Treasury market volatility.
- Western Securities
国金证券 - The article does not mention Western Securities. It primarily discusses recent turmoil in the U.S. Treasury market, shifts in global investor attitudes toward U.S. assets, American fiscal sustainability, and international responses to U.S. policies. There is no information or analysis related to Western Securities in this content.
- Zheshang Securities
浙商证券 - Zheshang Securities is mentioned in the article for its research, which points out that nearly $9.8 trillion in U.S. Treasuries will mature from April to the end of 2025, compared to $9.6 trillion and $7.9 trillion for the same periods in 2024 and 2023, respectively. This highlights rising refinancing and interest payment pressures on U.S. government debt.
- China International Capital Corporation (CICC)
中金公司 - According to the article, Liu Gang is the Chief Overseas and Hong Kong Stock Strategist at China International Capital Corporation (CICC). He analyzes that, after adjusting for short-term bonds, the actual amount of U.S. Treasury debt maturing in 2025 is less than in 2024, and notes that short-term rollovers do not add pressure to interest payments.
- Invesco
景顺 - In the article, Invesco is mentioned via commentary from Wong Ka-shing (黄嘉诚), Managing Director and Head of Asia Pacific Fixed Income at Invesco. He analyzes that rising U.S. Treasury yields increase U.S. government interest expenses and may pressure fiscal policy space, impacting the country's sovereign credit rating.
- Standard & Poor's
标准普尔 - According to the article, international rating agency Standard & Poor's (S&P) released a report on April 14, stating that the progress of U.S. government budget negotiations will impact the AA+ sovereign credit rating. S&P highlighted that rising federal government deficits and debt burdens are the main factors affecting the U.S. sovereign rating.
- Crisil Coalition Greenwich
Crisil Coalition Greenwich - According to the article, Crisil Coalition Greenwich is a research institution that provides data on the U.S. Treasury market. The article cites its data, stating that the U.S. Treasury market's average daily trading volume surged to $900 billion in 2024, reaching a record high for the year.
- PIMCO
PIMCO - PIMCO, a major international bond investment giant, recently stated that it views the volatility in U.S. Treasuries as an opportunity to increase duration exposure overseas. PIMCO is gradually diversifying its interest rate risk away from U.S. assets to other global fixed income markets, allocating more to non-U.S. fixed income assets rather than U.S. Treasuries.
- Hudson Bay Capital
Hudson Bay Capital - Hudson Bay Capital is mentioned in the article as the former firm of Stephen Miran, a former senior strategist who authored a 2024 paper suggesting the "Mar-a-Lago Accord." After Trump took office, Miran was appointed as chairman of the White House Council of Economic Advisers, bringing attention to his proposals regarding U.S. Treasury policies. The article does not provide further details about Hudson Bay Capital itself.
- Pictet Wealth Management
瑞士百达财富管理 - Pictet Wealth Management is mentioned in the article as having recently published a report analyzing the potential risks to the U.S. bond market and overall financial stability if parts of the so-called "Mar-a-Lago Accord"—such as imposing a fee on foreign holders of U.S. Treasuries—were to be implemented. The report views such measures as forms of "capital tariffs," which could pose significant risks.
- Long-Term Capital Management (LTCM)
长期资本管理公司 - Long-Term Capital Management (LTCM) was a hedge fund co-founded by Victor Haghani, mentioned in the article. LTCM became famous for its collapse in 1998 due to excessive leverage and exposure to global financial markets, despite employing sophisticated quantitative models. The fund’s near-failure threatened global financial stability and led to a coordinated bailout by major banks under the guidance of the U.S. Federal Reserve.
- Goldman Sachs
高盛 - According to the article, after the sharp fall in the US dollar index, Tony Pasquariello, head of Goldman Sachs' hedge fund business, published a report stating that the US dollar is currently overvalued by 20%. The report suggests that the era of a strong US dollar, which benefited from "American exceptionalism" during globalization, is now being challenged by the ongoing "reciprocal tariffs" policy.
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