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Traders are actively engaged on the floor of the New York Stock Exchange in New York City as of April 14, 2025, highlighting the ongoing dynamics in the financial markets.
Treasury yields experienced an uptick on Tuesday, following a brief decline the previous day, as the trend of selling off U.S. government debt resumed. This movement reflects a shift in investor sentiment as they continue to divest from Treasurys.
At 7:25 a.m. ET, the yield on the benchmark 10-year Treasury rose by nearly 3 basis points, reaching 4.395%. Similarly, the yield on the 2-year Treasury increased almost 4 basis points to 3.87%.
To clarify, one basis point is equivalent to 0.01%, and it is important to note that yields have an inverse relationship with prices.
This recent rise in yields follows a week of considerable volatility in the bond market, during which the 10-year Treasury yield surged by over 50 basis points.
Despite a temporary dip in yields due to President Donald Trump’s announcement of a 90-day pause on tariffs, the 10-year yield managed to bounce back, closing above 4.5% on Friday.
The significant sell-offs have raised questions about the motivations and identities of the sellers of Treasurys. Carol Schleif, chief market strategist at BMO Private Wealth, noted concerns among U.S. investors regarding the potential risks associated with foreign holdings, particularly by Chinese and Japanese investors who are the largest foreign creditors of the U.S., with China alone holding approximately $760 billion in Treasury securities.
Additionally, the combination of rising debt concerns and aggressive selling by hedge funds may have played a role in the current sell-off. Felix Brill, chief investment officer at VP Bank, commented on the increasing spreads of credit default swaps (CDS) for U.S. debt, indicating that past experiences suggest such conditions can trigger margin calls, prompting a need for liquidity and exacerbating market stress.
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