Bond market sell-off ‘severe’ as long-term yields notch biggest week since 1982

The bond market sell-off escalated Friday to cap off one of the most volatile and unusual trading weeks in recent memory as President Trump’s tariff whipsaw sent yields surging and investors fled safe haven assets.

Long-term Treasury yields skyrocketed, with the 10-year yield (^TNX) surging to its highest level since February to trade as high as 4.59%, a massive 72 basis point swing from Monday’s low of 3.87%. Shortly after the closing bell, yields pulled back to around 4.49%.

According to data compiled by Yahoo Finance, the 10-year has logged its biggest week since November 2001.

Similarly, the 30-year yield (^TYX) jumped 3 basis points to trade near 4.88% — the highest level since January but the biggest weekly surge for the 30-year yield since 1982.

Yields and bonds are inversely correlated, meaning higher yields equal falling bond prices.

The bond market serves as a “cash collateral” of sorts to investors who can then borrow money and bet on riskier assets like stocks. It’s also viewed as a safe haven during times of uncertainty, which has been the word du jour as Wall Street remains on edge that shifting trade dynamics could induce a recession.

Wall Street analysts have floated several theories to explain recent yield volatility, from sticky inflation and a cautious Federal Reserve to an investor shift from bonds to cash.

The unwinding of the basis trade, a highly leveraged trading strategy most often used by hedge funds, and greater concerns that foreign investors are selling their US Treasurys have also been top concerns.

But the sharp rise could be an unsettling fundamental shift, especially in combination with the performance of another safe haven asset: the US dollar.

On Friday, the US Dollar Index — which measures the dollar’s value relative to a basket of currencies (the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc) — plummeted below the psychologically meaningful 100 mark, hitting its weakest point since April 2022.

As concerns mount over the health of the US economy, rising skepticism over the stability of traditional safe-haven assets may trigger broader disruptions throughout the entire financial system.

“I do think it’s severe,” Marc Chandler, global foreign exchange chief market strategist at Bannockburn, told Yahoo Finance when asked about the sell-off in the US dollar and bond market. “People are concerned that maybe we’re seeing a capital strike against the US, where large pools of capital are selling US assets and taking their money home.”