SINGAPORE: U.S. Treasury yields jumped to near multi-month highs on Tuesday as U.S. President Donald Trump's threats to rekindle a trade war with Europe rattled markets and shook investor confidence in American assets.
The yield on the benchmark 10-year U.S. Treasury note rose as much as three basis points to a 4-1/2-month top of 4.2610% in early Asia trading, while the 30-year yield jumped 4.1 bps to 4.8810%, hovering near its highest level since early September.
The moves were a delayed reaction to the latest developments over Greenland that began at the weekend, as U.S. markets were closed on Monday for a public holiday.
"Given latest Trump tariff threats, USTs are caught between potential safe-haven flows and the sell-dollar-asset trade," said Frances Cheung, OCBC's head of FX and rates strategy.
On Saturday, Trump said he would impose an additional 10% import tariff from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, until the U.S. is allowed to buy Greenland.
He subsequently linked his drive to his failure to win the Nobel Peace Prize, saying he no longer thought "purely of Peace."
Major European Union states have since decried the tariff threats as blackmail and the bloc is looking at retaliating with its own measures.
The latest escalation of trade tensions has sparked broad selling of the dollar, Treasuries and Wall Street futures, in a move reminiscent of last year's crisis of confidence in U.S. assets following Trump's "Liberation Day" announcement.
On the shorter end of the curve, the five-year U.S. Treasury yield hit a five-month peak of 3.8420%, while the two-year yield dipped slightly to 3.5881%. - Reuters
