NEW YORK, 12 April 2025 (BSS/AFP) – The United States has long been regarded as a bastion of financial security. However, a broad sell-off involving the dollar, equities, and Treasury bonds—triggered by market anxiety over President Donald Trump’s trade war—has cast doubt on that reputation.
What Happened to US Assets This Week?
Over recent weeks, US equities and the dollar have come under sustained pressure. This week, turbulence extended to the US Treasury market—traditionally a cornerstone of global financial stability.
On Wednesday morning, just hours before President Trump unexpectedly announced a 90-day suspension of numerous tariffs, yields on both 10-year and 30-year US Treasury bonds spiked. Although markets briefly rallied in the aftermath of the announcement, Treasury yields resumed their upward climb on Thursday.
“There’s clearly a flight from US bonds,” said Steve Sosnick, Chief Strategist at Interactive Brokers. “Money is flowing out of the US bond market very quickly.”
Key Movements in US Financial Markets (9–11 April 2025):
| Asset Class | 10 April (Pre-Announcement) | 11 April (Post-Announcement) |
|---|---|---|
| S&P 500 Index | -3.8% | +4.6% |
| US 10-Year Treasury Yields | ↑ from 4.21% to 4.39% | ↑ to 4.47% |
| USD Index | ↓ 1.2% | Partial rebound (+0.3%) |
| Trump Media & Tech Stock | +21.67% | +5.2% |
JPMorgan Chase CEO Jamie Dimon dismissed claims that US Treasuries have lost their safe haven status but admitted that investor confidence had taken a hit.
“It does change the nature a little bit from the certainty point of view,” Dimon remarked. “But the United States still stands out as safe in this turbulent world.”
Why Are Investors Pulling Out of US Bonds?
The exodus from US bonds reflects increasing pessimism about the American economic outlook. Growing fears of a recession—fuelled by inflation from tariffs and reduced business investment—are reshaping global investor sentiment.
Larry Fink, CEO of BlackRock, noted the dramatic change in tone:
“Just 80 days ago at Davos, everyone was talking about US economic dominance.”
Further compounding investor concerns is the unpredictable nature of Trump’s “America First” policies—ranging from trade tensions to proposals for sweeping tax cuts and growing deficits.
A recent note from Berenberg Economics warned:
“Unconventional policies that gamble with a country’s public finances or growth prospects can undermine the perception that government debt is risk-free.”
Concerns have also been amplified by whispers that China, in retaliation to trade tensions, could offload its holdings of US Treasuries—although such a move would hurt Beijing’s own financial interests.
Implications for the US Dollar and Global Economy
The perceived safety of US Treasury bonds is intrinsically tied to the US dollar’s status as the global reserve currency, enabling the country to run larger deficits than its peers.
Since Trump’s inauguration, the euro has strengthened by approximately 10% against the dollar—a significant shift in global currency dynamics.
Despite these fluctuations, experts agree that the dollar’s position is unlikely to be threatened imminently. As the default currency for global commodities like oil, and a primary holding for central banks worldwide, the dollar remains without a serious challenger.
“There will be some lasting damage,” said Will Compernolle of FHN Financial. “But I don’t see any alternative replacing the dollar’s dominance right now.”
Outlook: Uncertainty vs Optimism
Despite the current turbulence, some financial leaders remain optimistic about America’s long-term economic trajectory. BlackRock’s Larry Fink cited planned investment in artificial intelligence and infrastructure as critical growth drivers.
He suggested that Trump’s policies on deregulation and tax reform could “unlock an amazing amount of private capital”—though their impact has been “obscured by tariff-related noise.”
Similarly, Morgan Stanley CEO Ted Pick predicted a revival in corporate deal-making, driven by investor confidence in lower corporate taxes and reduced red tape.